Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd

Catchwords

[2020] NSWSC 970 Assets Co Ltd v Mere Roihi [1905] AC 176 at 210Baba v Sheehan (2021) 151 ACSR 462(1874) 22 WR 505 Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256[2010] NSWCA 33 Clayton v Bant (2020) 95 ALJR 34[2020] HCA 44 Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 Commonwealth Bank of Australia v Barker (2014) 253 CLR 169[2014] NSWCA 336 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89[2007] HCA 22 Great Investments Ltd v Warner (2016) 243 FCR 516[2016] FCAFC 85 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296[2012] FCAFC 6 Gunasegaram v Blue Visions Management Pty LtdSame v Chdiac (2018) 129 ACSR 265[2018] NSWCA 179 Hanock v Rinehart (2015) 106 ACSR 207[2015] NSWSC 646 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298[2003] NSWCA 10 Harstedt Pty Ltd v Tomanek (2018) 55 VR 158[2018] VSCA 84 Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609[2014] NSWCA 266 Howard v Commission of Taxation (2014) 253 CLR 83

Judgment (106 paragraphs)

[1]

Trustee Act 1925 (NSW), ss 9, 71 Uniform Civil Procedure Rules 2005 (NSW), rr 6.24, 13.1, 13.4, 14.28 Cases Cited: Akierman Holdings Pty Ltd v Akerman (No. 2) (2020) 147 ACSR 63; [2020] NSWSC 970 Assets Co Ltd v Mere Roihi [1905] AC 176 at 210; Baba v Sheehan (2021) 151 ACSR 462; [2021] NSWCA 58 at [6] per Brereton JA. Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA [1993] 1 WLR 509 Barnes v Addy (1874) 43 LJ Ch 513; (1874) 22 WR 505 Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27 Beck v Weinstock [2012] NSWCA 289 Blair v Curran (1939) 62 CLR 464 C G Maloney Pty Ltd v Noon [2011] NSWCA 397 Champerslife Pty Ltd v Manojloviski (2010) 75 NSWLR 245; [2010] NSWCA 33 Clayton v Bant (2020) 95 ALJR 34; [2020] HCA 44 Codelfa Construction Pty Ltd v State Rail Authority (1982) 149 CLR 337 Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32 Council of the New South Wales Bar Association v Dwyer [2015] NSWCA 302 Despot v Registrar-General of NSW [2013] NSWCA 313 Ekes v Commonwealth Bank of Australia (2014) 313 ALR 665; [2014] NSWCA 336 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 Great Investments Ltd v Warner (2016) 243 FCR 516; [2016] FCAFC 85 Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 Gunasegaram v Blue Visions Management Pty Ltd; Same v Chdiac (2018) 129 ACSR 265; [2018] NSWCA 179 Hanock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646 Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298; [2003] NSWCA 10 Harstedt Pty Ltd v Tomanek (2018) 55 VR 158; [2018] VSCA 84 Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 Howard v Commission of Taxation (2014) 253 CLR 83; [2014] HCA 21 In the matter of Beechworth Land Estates Pty Ltd (2019) 140 ACSR 1; [2019] NSWSC 1129 In the matter of Beechworth Land Estates Pty Ltd (administrators appointed) [2017] NSWSC 1447 In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd); Cussen and of Beechworth Land Estates Pty Ltd v Douglas Estate Holdings Pty Ltd and Others (2019) 140 ACSR 1; [2019] NSWSC 1129 In the matter of Beechworth Land Estates Pty Ltd (in liquidation) and Griffith Estates Pty Ltd (in liquidation) [2018] NSWSC 1703 In the matter of Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 Kordovoulos v Dixon-Hughes [2021] NSWSC 722 Kuligowski v Metrobus (2004) 220 CLR 363; [2004] HCA 34 Mackay v Dick [1881] 6 App Cas 251 Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 McFee v Reilly [2018] NSWCA 322 Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427; [2011] HCA 48 Photios v Cussen (in their capacity as joint administrators of Beechworth Land Estates Pty Ltd (admins apptd) [2015] NSWSC 336 Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62; [2020] NSWCA 344 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 Rogers v The Queen (1994) 181 CLR 251 at 286 Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209 Talako v Talako [2021] HCA 15 Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 Victoria International Container Terminal Limited v Lunt (2021) 288 ALR 376; [2021] HCA 11 Warman International Ltd v Dwyer (1995) 182 CLR 544 Williams v Spautz (1992) 174 CLR 509 Texts Cited: Handley, K R, Spencer Bower and Handley: Res Judicata (5th ed, LexisNexis Butterworths, 2019) Heydon, J D, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015) Thomas, Geraint, Thomas on Powers (2nd ed, 2012), Chapter 9 Category: Principal judgment Parties: Overdean Developments Pty Ltd as trustee of the Dean Super Fund (First Plaintiff) Brian Dean (Second Plaintiff) B.A.D Nominees (NSW) Pty Ltd (Third Plaintiff) Garslev Holdings Pty Ltd (First Defendant) Leonardus Gerardus Smits (Third Defendant) Peter Shah Mahommed (Fourth Defendant) Vestecorp Financial Services Pty Ltd (Fifth Defendant) Jacobus Smits (Sixth Defendant) Representation: Counsel: D Allen (Plaintiffs) L Smits, solicitor (Defendants)

[2]

Solicitors: Kekatos Lawyers (Plaintiffs) Leonardus Smits (Defendants) File Number(s): 2018/384191 Publication restriction: N/A

[3]

OVERVIEW
These proceedings arise out of: 1. a Power of Attorney executed on 9 May 2016 by BAD Nominees (NSW) Pty Limited (BAD Nominees) appointing Mr Leonardus Smits (Mr Smits) and Mr Peter Shah Mahommed (Mr Mahommed) as its attorneys for a period of three years to exercise its rights and powers under or ancillary to certain loans that it made in February 2013 to Beechworth Land Estates Pty Limited and Griffith Estates Pty Limited; and 2. the subsequent conduct of Messrs Smits and Mahommed and Mr Mahommed's company, Vestecorp Financial Services Pty Limited (Vestecorp), acting or purporting to act in accordance with the Power of Attorney and/or a Consultancy Agreement or a document entitled "Irrevocable Authorisation and Direction" (the IAD) executed by BAD Nominees on the same date.
It is convenient to describe the parties to these proceedings and other persons and entities involved in relevant events in the context of a very brief overview of those events.
BAD Nominees was formerly the second defendant but is now the third plaintiff in these proceedings. [1] At the time that it executed the Power of Attorney, Consultancy Agreement and IAD on 9 May 2016, BAD Nominees was the trustee of a self-managed superannuation fund known as the Dean Super Fund.
The Dean Super Fund was established by the second plaintiff in these proceedings, Mr Brian Dean (Mr Dean), in December 2012. [2]
Mr Dean completed his formal education in the eighth grade of school at the age of 14 in 1962. He worked as a train driver from about 1965 to 2003 and subsequently became a farmer. [3]
Mr Dean is the sole beneficiary of the Dean Super Fund. [4]
BAD Nominees was the trustee of the Dean Super Fund from the establishment of the fund in December 2012 until 5 September 2018. [5] Mr Dean has been the sole shareholder and director of BAD Nominees at all times. [6]
In February 2013, BAD Nominees (as trustee of the Dean Super Fund) made a loan of $2,000,000 to Beechworth Land Estates Pty Ltd (BLE) to fund BLE's acquisition of a mortgage in respect of 39 lots of land located in Beechworth, Victoria (the Beechworth land) by assignment from the existing mortgagee, Suncorp Metway Limited (Suncorp). The mortgagor, Redhill Developments Pty Ltd (Redhill), had defaulted under the mortgage and Suncorp assigned the mortgage to BLE rather than enforcing its security interest. The loan made by BAD Nominees to BLE for the purpose of BLE acquiring Suncorp's mortgage was secured on the terms of a general security agreement. [7] It is convenient to refer to these transactions between BAD Nominees and BLE as the February 2013 loan and the February 2013 security.

[4]

II. INTRODUCTORY OBSERVATIONS AND STRUCTURE OF THESE REASONS

The pleadings in this matter are voluminous. Large parts of the defence read more like a submission than a pleading. It has therefore not been necessary to refer to every aspect of the issues pleaded in these reasons for judgment. I have nevertheless endeavoured to give a reasonably comprehensive account of those issues and to note matters that were pleaded by a party but that did not feature in that party's case as presented at trial and are therefore taken to have been abandoned. I considered it prudent to do so in case of any appeal and also because, as will become apparent, the plaintiffs have a history of seeking to relitigate matters in fresh proceedings and the defendants have a tendency to overstate the scope of matters that have been determined in prior proceedings and estopples arising from prior proceedings.
The defendants' evidence is also voluminous. The defendants read in this proceeding 14 affidavits of Mr Mahommed, many of which had been prepared for the purpose of earlier proceedings, rather than preparing one comprehensive affidavit addressing the issues relevant to this proceeding. To the extent that those affidavits addressed matters relevant to this proceeding, there was a high degree of repetition and duplication between the affidavits. The defendants also tendered several folders of documents, many of which were already included in the six volume court book prepared by the plaintiffs and tendered at the hearing. All of the evidence has been considered, but it has not been necessary to refer to every detail of the evidence in these reasons.
The defendants also prepared written submissions of 340 pages prior to the commencement of the hearing. Those submissions contained a great deal of material that did not directly address the substance of the issues raised by the pleadings, and also purported to raise several matters that were outside the scope of the defendants' very lengthy pleadings. Mr Smits, who appeared for all defendants at the final hearing, made oral opening submissions and prepared a more succinct written closing submission. He declined the opportunity to supplement his written closing submission with oral submissions. Mr Smits confirmed that the substance of the defendants' submissions to be considered by the Court are recorded in their written closing submissions, together with any specific parts of the earlier submissions specifically referred in the written closing submissions. [22] In the preparation of these reasons, I have approached my consideration of the defendants' submissions accordingly, although I have also had regard to their oral opening submissions and any parts of the 340 page written opening submissions expressly referred to therein. I have also had regard to the plaintiffs' written and oral opening submissions and oral closing submissions, including their oral submissions in reply to the defendants' written closing submissions. All of the parties' submissions referred to above have been carefully considered, although it has not been necessary to refer to the substance of all of them in disposing of the issues raised for determination.

[5]

III. SUMMARY OF KEY EVENTS, ALLEGATIONS AND CLAIMS FOR RELIEF

[6]

February 2013 loan and security

As explained by Parker J in his Honour's judgment in other proceedings in this Court relating to BLE: [23] "BLE was incorporated in October 2012 as a special purpose vehicle for acquiring control of a property development in Beechworth, Victoria, from the financier, Suncorp Metway Limited ('Suncorp'). The original developer was a company called Redhill Estate Developments Pty Ltd ('Redhill'). Redhill had mortgaged the land, which consisted of 39 lots, to Suncorp as security for a loan of $1.55 million. Redhill later defaulted. Rather than exercise its power of sale under the mortgage, Suncorp assigned the debt owed to it by Redhill, and the benefit of the mortgage, to BLE. BLE funded the purchase by borrowing up to $2 million from [BAD Nominees]. The loan was recorded in a Deed of Loan and secured under a general security agreement dated 1 February 2013…."
It was in these circumstances that BLE came to be the mortgagee of the Beechworth land on 1 February 2013, as referred to at [8] above. The Assignment Deed between Suncorp and BLE dated 8 November 2012 assigned to BLE all of Suncorp's estate and interest in "the Securities", moneys secured by or payable under the Securities and Suncorp's rights, powers and entitlements under the Securities, in consideration for $1,550,000. The "Securities" included registered mortgage AF168070Y dated 27 June 2007 in respect of Redhill's land in certificate of title volume 10767 folios 961, 959 and 960 and volume 10851 folio 564 (which I assume were the title references for the Beechworth land at that time). [24]
Pursuant to the Deed of Loan dated 1 February 2013 between BAD Nominees (as trustee of the Dean Super Fund) and BLE, BAD Nominees agreed to lend BLE an aggregate amount of up to $2,000,000 to be applied for the purpose of BLE completing the assignment from Suncorp of the Securities referred to above and taking steps to enforce BLE's rights in accordance with those Securities. The loan was repayable one year after the date of the Deed of Loan, or on such other date as BAD Nominees and BLE may agree in writing. BLE was required to pay interest at rates specified in drawdown notices. [25]
Pursuant to the February 2013 security (also entered into by BAD Nominees in its capacity as trustee of the Dean Super Fund), BLE charged in favour of BAD Nominees all of BLE's right, title and interest in the "secured property" or "security property" to secure the due and punctual repayment of all moneys lent by BAD Nominees to BLE as at the date of the February 2013 security or in the future. The "security property" comprised all circulating and non‑circulating real and personal property of BLE (including BLE's interest in the Beechworth land and rights as mortgagee under registered mortgage AF168070Y). [26]

[7]

Administrators appointed to BLE and GEP: July 2014

On 14 July 2014, Vangory Holdings Pty Ltd (Vangory Holdings) appointed administrators to BLE and Vangory Services Pty Ltd (Vangory Services) appointed administrators to GEP pursuant to s 436C of the Corporations Act. [28] Messrs Neil Cussen and Ezio Senatore of Deloitte were the appointed administrators of both companies.
Vangory Services and Vangory Holdings were also secured creditors of BLE, with security interests registered on the PPSR on 26 January 2014 and 11 June 2014 respectively. Reports issued by the administrators of BLE recorded that BAD Nominees' security interest was ranked first in priority amongst secured creditors, with Vangory Services and Vangory Holdings ranked second and third respectively. [29] Nevertheless, there were disputes during the course of the administration concerning the priority between Vangory Holdings and BAD Nominees, and as between the claims of all secured creditors and the administrators' claims for their remuneration. [30]
At the time of the administrators' appointment, 28 lots of the Beechworth land remained unsold and BLE was mortgagee in possession of those lots. [31] The administrators were subsequently appointed as agents of BLE as mortgagee in possession of the 28 lots of the Beechworth land and as court appointed receivers of those 28 lots. [32]
On 22 July 2014, BAD Nominees lodged a proof of debt with the administrators for an amount of $807,903.04 claimed to be owing by BLE to BAD Nominees under the February 2013 loan. Loan and payment ledgers issued as at 20 July 2014 reveal that this sum comprised $335,410.10 principal owing from an initial advance of $1,400,000, an amount of $61,030.55 that BLE had drawn down under a redraw facility, substantial interest charges and some exit fees. The interest rate on the $1,400,000 loan was 12 per cent, with a default interest rate of 18 per cent. Interest was calculated on the daily balance of the loan and payable monthly in arrears. The proof of debt stated that BAD Nominees held security for the debt under the February 2013 security that had been registered on the PPSR on 13 May 2013. [33]

[8]

The 2014 proceedings

On 4 August 2014, Mr Photios and various other parties commenced proceeding 2014/229138 in this Court seeking orders under s 447C of the Corporations Act declaring that the appointments of the administrators were invalid (the 2014 proceedings). Ultimately, the appointments were held to be valid insofar as they concerned BLE and were subsequently validated insofar as they concerned GEP. [34]
Orders were subsequently made in the 2014 proceedings extending on several occasions the convening period for the second meeting of creditors. The convening period was ultimately extended until February 2018. [35]

[9]

Assignment from BAD Nominees to Batbel Pty Ltd and the statutory demand issued by Vangory Holdings

Prior to the appointment of the administrators, BAD Nominees had entered into a deed on 8 July 2014 pursuant to which it had assigned its interest in the February 2013 loan and February 2013 security to Batbel Pty Ltd (Batbel) in consideration for $816,797.87, which was payable 28 days after the date of the deed. [36]
It appears that the deed was not performed, or not fully performed, as BAD Nominees issued a notice to Batbel on 10 January 2015 terminating the deed. [37]
Batbel responded by issuing a notice to complete on 19 January 2015. [38] However, completion did not occur. On 24 June 2015, Batbel assigned to Vangory Holdings a debt of $62,000 that Batbel claimed was owed to it by BAD Nominees, being the deposit instalments paid by Batbel under the 8 July 2014 deed. On 30 December 2015, Vangory Holdings issued a statutory demand to BAD Nominees in respect of the alleged debt assigned to it. [39]
BAD Nominees did not pay the amount demanded and Vangory Holdings did not commence proceedings to wind up BAD Nominees relying on its failure to comply with the statutory demand. [40] However, as will become apparent, the statutory demand assumed some importance in the subsequent discussions between Messrs Dean, Mahommed and Smits in early May 2016.

[10]

May 2016 negotiations and the alleged Attorney conspiracy

The plaintiffs allege that Mr Photios informed Messrs Smits and Mahommed in May 2016 that Mr Dean was a retired train driver and farmer who had lent money to BLE, that Mr Dean had appeared in the 2014 proceedings and informed the Court that he was owed a lot of money by BLE and that he did not know what to do, and that Mr Dean could not recover the money owing by BLE without the assistance of a legal practitioner. [41] As referred to earlier in these reasons, Mr Photios was the sole director of BLE at all times material to these proceedings. The plaintiffs allege that Mr Photios was also a client or associate or Mr Smits. [42]
The plaintiffs allege that, on learning this information, Messrs Smits and Mahommed agreed that they would procure from BAD Nominees an agreement or agreements pursuant to which they would: [43] 1. perform legal services for BAD Nominees (or, in the case of Mr Mahommed, assist Mr Smits to perform legal services for BAD Nominees); 2. charge BAD Nominees for legal services; 3. secure payment of their charges for legal services, or any other services, by having BAD Nominees give them a power of attorney; 4. use the power of attorney to ensure that they were paid; 5. be paid an amount greater than a fair, reasonable and proportionate charge for the services provided; 6. decide how, how much, and when they would be paid because the power of attorney would permit them to pay themselves without the knowledge and approval of BAD Nominees and BAD Nominees would not have the wherewithal or funds to take action to dispute the charges; 7. use the power of attorney to stop Mr Dean complaining by preventing Mr Dean from acting in the name of BAD Nominees; and 8. assist one another and act as one another's agent in implementing the agreement.
The plaintiffs refer to this alleged agreement as the Attorney conspiracy and I will adopt the same terminology. Invoking the second limb of Barnes v Addy, the plaintiffs plead that the Attorney conspiracy was a dishonest and fraudulent design under which Messrs Smits and Mahommed agreed to deceive Mr Dean into believing that Mr Smits could and would provide the legal services required to recover money from BLE, with the assistance of Mr Mahommed, in return for fees that were fair, reasonable and proportionate, whereas Messrs Smits and Mahommed intended to determine how much they would be paid without reference to what work they performed and irrespective of whether the charges were fair, reasonable and proportionate. [44]

[11]

Power of Attorney, Consultancy Agreement, IAD and other documents executed on 9 May 2016

Although the IAD and Consultancy Agreement bear the date 5 May 2016, those documents were executed together with the Power of Attorney on 9 May 2016. [66]
Clause 1 of the Power of Attorney provided that BAD Nominees appoints Mr Smits and Mr Mahommed, jointly and severally, to be its attorneys. Clause 4 provided that the power operated on and from 5 May 2016 to 5 May 2019.
Clause 2 provided that: 1. the attorneys may exercise the authority conferred by Part 2 of the Powers of Attorney Act 2003 (NSW) to do anything on behalf of BAD Nominees that BAD Nominees may lawfully authorise an attorney to do; and 2. the attorneys shall be appointed: "… irrevocably for three (3) years as 'authorised representatives' and agents of the principal to act and to exercise all powers, rights and privileges of or imputable to or exercisable by the principal in relation to and respect of the matters referred to in page 5…"
The matters referred to on page 5 of the Power of Attorney were: "(a) Beechworth Land Estates Pty Ltd (Administrators Appointed) A.C.N. 160 808 631 ("BLE") regarding, touching or concerning, under, or ancillary or incidental to: I. Deed of Loan dated 1 February 2013 between BLE, the Principal and James Edward Spencer; II. General Security Agreement dated 1 February 2013 between BLE as Grantor and the Principal as Secured Party; III. Associated PPSR Documents Rn. No. 2013 051 300 0068 with start time of 13 May 2013 and end date of 13 May 2038; IV. Redhill Estate Developments Pty Ltd A.C.N. 118 520 755 ATF The Red Hill Trust Partnership and in its personal capacity ("RED") with respect to Mortgage Rd. No. AF 168070Y, any land or lots mortgaged thereby, the associated Deed of Loan dated 27 June 2007 between RED as the Mortgagor and any existing of past Mortgagee, and any associated marketing, sale or other realisation and security over the land or lots; V. Any Administration, Liquidation, Affairs and/or litigation or claims to which BLE and/or RED may be privy, may maintain or prosecute or be affected by; VI. Any disputes or claims concerning BLE and/or RED and any associated debts or liabilities, securities or trusts and priorities; (b) Griffith Estates Pty Limited (Administrators Appointed) A.C.N. 160 796 672 ("GEP") touching, concerning or affecting or under or ancillary or incidental to: I. Any land or lots owned now or previously by GEP; II. Any realisation, sale or disposition of any existing or former land or lots of GEP; III. Any debt or liability, security or trust interest held by any creditor or beneficiary of GEP; IV. Any Administration, Liquidation, Affairs and/or litigation or claims to which GEP may be privy, or maintain or prosecute or be affected by; V. Any disputes or claims concerning GEP and any associated debts or liabilities, securities or trusts or priorities." [67]

[12]

Whether execution of the 9 May 2016 documents involved breach of fiduciary duties by Messrs Smits and Mahommed and Vestecorp

The plaintiffs plead that, at the time that the Power of Attorney, Consultancy Agreement and IAD were executed, Messrs Smits and Mahommed told Mr Dean that he should sign the documents straight away as there was no time to delay, and that the documents were for the benefit of Mr Dean and BAD Nominees and would facilitate Messrs Smits and Mahommed to act in the best interests of Mr Dean and BAD Nominees when collecting the debt owed by BLE. The plaintiffs also plead that Mr Smits told Mr Dean that the Power of Attorney was for Mr Dean's convenience so that Messrs Smits and Mahommed did not have make repetitive, time-wasting trips to have Mr Dean execute documents. [88]
Messrs Smits and Mahommed deny that these things were said to Mr Dean and maintain that Mr Dean relied on his independent advisers and had ample opportunity to seek and obtain independent legal advice and that he in fact did so. [89]
The plaintiffs allege that: 1. Messrs Smits and Mahommed and Vestecorp expected Mr Dean to execute the Power of Attorney, IAD and Consultancy Agreement on behalf of BAD Nominees due to the encouragement of Mr Smits, as a purported Australian legal practitioner; [90] 2. at the time those documents were executed, there was a conflict between the interests of Mr Dean and BAD Nominees on the one hand, and the interests of Messrs Smits and Mahommed on the other hand, because: [91] 1. BAD Nominees had an interest in knowing that Mr Smits was not an Australian legal practitioner and in being told that it should consider retaining an Australian legal practitioner; 2. Messrs Smits and Mahommed were acting solely in their own interests to obtain a bargain that was detrimental to Mr Dean and BAD Nominees and to further the Attorney conspiracy, whereas Mr Dean and BAD Nominees had an interest in the bargain being fair and reasonable; 3. Messrs Smits and Mahommed had an interest in not disclosing their anticipated fees, whereas BAD Nominees had an interest in having an honest and reliable estimate of those fees; 4. Messrs Smits and Mahommed wanted a power of attorney and BAD Nominees had an interest in knowing that any agreement struck with Messrs Smits and Mahommed could be performed without a power of attorney and also that a power of attorney was open to abuse by attorneys; 5. Messrs Smits and Mahommed had an interest in having an irrevocable power of attorney, whereas BAD Nominees had an interest in the power of attorney being revocable; 6. Messrs Smits and Mahommed wanted a power of attorney to secure their fees because they intended to use it to pay themselves, and BAD Nominees had an interest in knowing that this was their purpose; 7. Messrs Smits and Mahommed had an interest in being able to act as if they were BAD Nominees without having to inform Mr Dean of what they were doing and without Mr Dean having to approve of what they were doing, whereas BAD Nominees had an interest in knowing that an agreement with Messrs Smits and Mahommed for the recovery of moneys from BLE could be performed without a power of attorney; and 8. Messrs Smits and Mahommed had an interest in not giving full disclosure, whereas BAD Nominees had an interest in receiving full disclosure; 1. Messrs Smits and Mahommed failed to inform Mr Dean of the following matters prior to execution of the Power of Attorney, IAD and Consultancy Agreement: [92] 1. Mr Smits was not an Australian legal practitioner; 2. a power of attorney was not essential to the performance of any agreement for the recovery of money from BLE; 3. a power of attorney was open to abuse as it enabled the attorneys to act as if they were BAD Nominees; 4. the Power of Attorney, as interpreted by Messrs Smits and Mahommed, permitted them to act without the instructions of Mr Dean and, indeed, contrary to the instructions of Mr Dean; 5. the Power of Attorney, as interpreted by Messrs Smits and Mahommed, permitted them to determine how and how much they could charge for fees and how and when those fees were to be paid, without the consent of Mr Dean; 6. the Power of Attorney could not be revoked for three years; 7. that, so long as Messrs Smits and Mahommed were using the Power of Attorney, they would charge fees to BAD Nominees; 8. that Messrs Smits and Mahommed would use the Power of Attorney to further the Attorney conspiracy; 9. the amount of fees that BAD Nominees may be liable to pay and how the fees would be charged, being information that Mr Dean required in order to substantiate the charges; and 10. that Mr Dean should obtain independent legal advice due to the nature and scope of the obligations and risks being undertaken by BAD Nominees in executing the Power of Attorney, IAD and Consultancy Agreement.

[13]

Alleged non-disclosure and conspiracies involving Mr Dean in May 2016

Messrs Smits and Mahommed and Vestecorp allege that Mr Dean failed to inform them of the following alleged matters prior to execution of the Power of Attorney, the Consultancy Agreement and the IAD: [106] 1. no moneys were owing by BLE to BAD Nominees under the February 2013 security; 2. the Dean Super Fund was not a complying self-managed superannuation fund under the relevant income tax and superannuation legislation; 3. "as to quanta, levels or limits of his drawings from" the Dean Super Fund and "as to resulting tax evasion or avoidance or liabilities of [Mr Dean] and of [BAD Nominees] to the ATO"; 4. "as to levels of unpaid [Dean Super Fund] Trust Creditors, including the Commissioner of Taxation"; 5. "as to the execution of the MAFA Deed"; and 6. "other serious matters relevant to the exercise of powers under the [Power of Attorney] and the administration of the affairs of the [Dean Super Fund]".
Messrs Smits and Mahommed and Vestecorp claim that Mr Dean dishonestly combined or agreed with Mr Conlon and Mr Armstrong to induce them to enter into the Power of Attorney, Consultancy Agreement, IAD and other documents signed on 9 May 2016 by dishonestly representing to them that in excess of $800,000 was owing under and secured by the February 2013 loan and the February 2013 security. Messrs Smits and Mahommed and Vestecorp allege that those representations were made in order that Mr Dean or BAD Nominees would obtain financial advantages from Mr Smits, Mr Mahommed or the administrators of BLE, or in order that Messrs Smits and Mahommed would suffer financial losses in performing the agreements signed on 9 May 2016. [107] This alleged conspiracy by unlawful means [108] is one of the matters relied on by Messrs Smits and Mahommed and Vestecorp in support of their contention that "each plaintiff is precluded or estopped at law and in equity from relying upon or maintaining any causes of action pleaded in the [third further amended statement of claim] or in order to make good any cause of action pleaded therein in reliance upon any such illegality or use of any such unlawful means." [109]
Messrs Smits and Mahommed and Vestecorp also claim that Mr Dean dishonestly combined or agreed with Mr Conlon and Mr Armstrong to induce them to enter into the Power of Attorney, Consultancy Agreement, IAD and other documents signed on 9 May 2016 by: [110] 1. allegedly making dishonest representations to Messrs Smits and Mahommed to the effect that the Dean Super Fund was a complying self-managed superannuation fund for the purpose of the Superannuation Industry (Supervision) Act 1993 (Cth) and related provisions of the income tax legislation; and 2. allegedly using unlawful means to avoid or evade the payment of income tax by BAD Nominees in its capacity as trustee of the Dean Super Fund and by Mr Dean as the beneficiary of that fund, so as to cause losses to the Commonwealth and other creditors of the Dean Super Fund by receiving, retaining and appropriating monies and assets of the Dean Super Fund to Mr Dean's own use or benefit by deception and unlawful means, including alleged breaches of the Superannuation Industry (Supervision) Act 1993 (Cth) pleaded in the Further Amended Cross-Claim. [111] This alleged conspiracy by unlawful means [112] is another matter relied on by Messrs Smits and Mahommed and Vestecorp in support of their contention that "each plaintiff is precluded or estopped at law and in equity from relying upon or maintaining any causes of action pleaded in the [third further amended statement of claim] or in order to make good any cause of action pleaded therein in reliance upon any such illegality or use of any such unlawful means." [113]

[14]

Alleged fiduciary relationship created on execution of the Power of Attorney and other documents on 9 May 2016 and implied contractual obligations

The plaintiffs allege that, from the time that the Power of Attorney and other documents were executed on 9 May 2016, Messrs Smits and Mahommed were the fiduciaries of BAD Nominees by reason of the following matters: [114] 1. the alleged existing fiduciary referred to at [63]-[64] above; 2. the Power of Attorney, Consultancy Agreement and IAD, which the plaintiffs characterise as a "pledge by Messrs Smits and Mahommed to act in the best interests of [BAD Nominees]"; 3. the terms and nature of the Power of Attorney, including the express terms of clause 6(c)-(e) set out at [75] above which the plaintiffs claim were included to confirm the fiduciary character of the obligations owed by Messrs Smits and Mahommed to BAD Nominees; 4. the overriding purpose of the Power of Attorney, Consultancy Agreement and IAD was, according to the plaintiffs, to allow Messrs Smits and Mahommed to act as legal representatives and agents of BAD Nominees; 5. in so acting, Messrs Smits and Mahommed would make decisions that would bind and affect BAD Nominees; and 6. the relationship was one in which BAD Nominees reposed trust and confidence in Messrs Smits and Mahommed and BAD Nominees was therefore (to the knowledge of Messrs Smits and Mahommed) vulnerable to any misuse by them of their powers and authority.
The plaintiffs plead that, by reason of the fiduciary relationship referred to immediately above, Messrs Smits and Mahommed owed various duties, including prescriptive duties, to BAD Nominees. [115] However, at the final hearing, the plaintiffs confined the duties on which they relied to proscriptive duties not to obtain an unauthorised benefit from the fiduciary relationship for themselves or a third party and not to be in a position of conflict.
Messrs Smits and Mahommed deny any existing fiduciary relationship at the time that the Power of Attorney and other documents were executed on 9 May 2016 [116] and deny that they became the fiduciaries of BAD Nominees upon the execution of those documents. In particular, Messrs Smits and Mahommed say that: [117] 1. they made no pledge to BAD Nominees that overrode the express terms of the Power of Attorney, Consultancy Agreement and IAD; 2. clause 6(c)-(e) of the Power of Attorney, properly construed, does not support the characterisation of any duty owed to BAD Nominees as fiduciary and did not override or "neutralize" the express terms of the Power of Attorney; 3. the Power of Attorney, Consultancy Agreement and IAD, properly construed, did not have the overriding purpose of allowing Messrs Smits and Mahommed to act as legal representatives and agents of BAD Nominees (although they maintain that Mr Mahommed was "indubitably authorized" by the Power of Attorney to engage Mr Smits as a legal representative of BAD Nominees); 4. "there is nothing remarkable or extraordinary per se about an attorney making a decision which binds or affects or, even adversely affects, the principal"; 5. the relationship was not one in which BAD Nominees reposed trust and confidence in them as attorneys, but one in which all parties had an implied contractual duty of co-operation in the performance of the Power of Attorney, the Consultancy Agreement and the IAD and under which the interests of Messrs Smits and Mahommed and Vestecorp were "capable of being protected at law and in equity by the use of the [Power of Attorney]"; 6. neither Mr Dean nor BAD Nominees was vulnerable by reason of Messrs Smits and Mahommed "hypothetically misusing their powers", and their powers and authority arose not from any trust and confidence reposed in them by BAD Nominees but by reason of the express terms of clause 2 of the Power of Attorney referred to at [72]-[73] above; and 7. any duty to avoid a conflict between their own interests and the interests of BAD Nominees was "proscriptive and of limited or qualified application" in that it was qualified by clause 2 of the Power of Attorney referred to at [72]-[73] above.

[15]

Steps taken by Messrs Smits and Mahommed immediately after the execution of the 9 May 2016 documents

On 9 May 2016, Mr Smits wrote to the administrators enclosing a copy of the Power of Attorney and notifying them that, from 5 May 2016, he and Mr Mahommed were appointed as duly authorised representatives of BAD Nominees under the February 2013 loan agreement. [119]
In the letter, Mr Smits claimed that there was a dispute about the validity of the securities held by Vangory Holdings and Vangory Services pursuant to which those companies had appointed the administrators to BLE and GEP.
Mr Smits also claimed, by reference to case law, that the administrators, as court-appointed receivers, did not have priority over BAD Nominees and that s 443E of the Corporations Act did not apply to the administrators' remuneration as court-appointed receivers.
Mr Smits then went on to refer to certain orders made in the 2014 proceedings on 3 February 2016, as varied on 16 March 2016, in relation to "Griffith Lots in Folio Identifier 12-17/1131234" and proposed that those orders be further varied by consent to protect alleged interests of BAD Nominees. Mr Smits also made certain claims concerning the effect of those orders on the rights of the administrators of GEP under s 443E of the Corporations Act in respect of their remuneration.
Mr Smits claimed that certain property of GEP was held on trust for BAD Nominees, and requested that the administrators account to BAD Nominees immediately for the proceeds of sale of that property, failing which enforcement action and litigation was threatened. Attachment B to the letter set out a four page analysis relied on in support of the contention that the relevant GEP property was held on constructive trust for BAD Nominees under the first limb of Barnes v Addy, referring at length to several cases.
The letter concluded with an offer that Messrs Smits and Mahommed would attend an urgent without prejudice meeting with the administrators and their solicitors.
On 10 May 2016, Messrs Smits and Mahommed issued to BLE and Redhill a notice under s 78 of the Transfer of Land Act 1958 (Vic) that BLE had entered into possession of the assets and undertaking of BLE and the mortgaged property of Redhill. [120]
The letter and notice referred to above elicited an email from the administrators' solicitor, Mr Steven Mattiussi of the firm Russells, to Mr Smits on 11 May 2016. [121]

[16]

Attempted revocation of the Power of Attorney and termination of Consultancy Agreement and IAD on 31 May 2016

On or about 28 May 2016, Mr Dean discovered that Messrs Smits and Mahommed claimed that fees of $120,000 were payable by BAD Nominees under the Consultancy Services Agreement for the period 9 May 2016 to 31 May 2016. [126] This claim was recorded in the memorandum referred to above, which was provided to Mr Dean during or at the conclusion of a meeting between Messrs Dean, Armstrong, Smits and Mahommed on that date. The memorandum set out various matters said to have been discussed in a meeting on 26 May 2016 between Messrs Dean, Conlon, Armstrong, Smits and Mahommed (many of which are the subject of dispute in these proceedings), including the following: [127] "At the conclusion of the meeting on 26 May 2016, [Messrs Mahommed and Smits] sought direction from the meeting as to the amount which might be acceptable to BAD [to accept from the administrators in full settlement of its claims]. The consensus was $400K, but this would be reducible by $120K incurred under the [Power of Attorney]."
The plaintiffs allege that the amount of $120,000 was simply made up by Messrs Smits and Mahommed on the basis that the administrators had offered to pay BAD Nominees the sum of $120,000 in settlement of BAD Nominees' claims against BLE. [128]
Messrs Smits and Mahommed deny this. They say that they made a compromise offer to Mr Dean and BAD Nominees to accept immediate payment of $120,000 from any settlement sum agreed between BAD Nominees and the administrators of BLE, and that acceptance of that compromise offer was made conditional on payment of $400,000 to BAD Nominees in full satisfaction of its claim as a secured creditor of BLE. However, the administrators were not willing to pay more than $120,000 to settle BAD Nominees' claim against BLE, so the compromise did not proceed and no payment was made to Mr Smits or Vestecorp for work done during the period 9 May 2016 to 31 May 2016. [129]
There is no evidence of the administrators proposing or offering to settle BAD Nominees' claim for $120,000. However, I understand from the parties' pleadings referred to at [135] and [136] above that it is common ground that administrators were willing to enter into such a settlement with BAD Nominees as at the end of May 2016.
The plaintiffs also claim that, by purporting to charge a total amount of $120,000 for work done during the period 9 May 2016 to 31 May 2016, Messrs Smits and Mahommed breached a term that the plaintiffs contend was implied in the Consultancy Agreement by s 172 of the Legal Profession Uniform Law (NSW) [130] because the charges exceeded what was fair, reasonable and proportionate in the circumstances. [131]

[17]

Work performed by Messrs Smits and Mahommed after May 2016

The defendants claim that Mr Smits, Mr Mahommed and Vestecorp continued to perform services under the Consultancy Agreement and the Power of Attorney in relation to the conduct of the 2014 proceedings and negotiations with the administrators of BLE that culminated in the entry into a contract between the administrators and BAD Nominees on 2 August 2017. [139]
Messrs Smits and Mahommed prepared a written submission dated 10 June 2016 on behalf of BAD Nominees in the 2014 proceedings. The submission was in the form of a letter addressed to the chambers of Robb J. The submission opposed a further extension of the administration to November 2016 and stated that an extension would be contrary to the policy underpinning Part 5.3A of the Corporations Act, asserted BAD Nominees' first priority as a secured creditor and relied on the propositions set out in the letters to the administrators' solicitors dated 9 May and 12 May 2016 (copies of which were enclosed). [140]
There is no evidence of any other work done by Messrs Smits and Mahommed or Vestecorp during the period from 31 May 2016 until 13 June 2017.

[18]

Purported assignment to MAFA and the alleged MAFA conspiracy

On 10 August 2016, BAD Nominees and MAFA entered into the MAFA deed pursuant to which BAD Nominees agreed to assign to MAFA the debt owing by BLE to BAD Nominees under the February 2013 loan in the amount of $807,903.04 and the securities granted by BLE to BAD Nominees under the February 2013 security. In consideration for the assignment, MAFA agreed to pay to BAD Nominees a specified sum in instalments, with all payments to be made by 30 September 2016 or such later date as the parties may agree, plus 50 per cent of certain monies paid into court in proceedings in the Supreme Court of Queensland that are unrelated to the present proceedings. [141]
MAFA was incorporated on 28 June 2016, just weeks before the MAFA deed was entered into. Its sole director, Mr Batiste, was also the sole director of Batbel with which BAD Nominees had entered into the deed of assignment on 8 July 2014 that had been terminated on 10 January 2015. [142]
Mr Cohen, on behalf of BAD Nominees, sent a copy of the MAFA deed to the administrators on 30 August 2016. [143]
In these proceedings, the plaintiffs refer to the MAFA deed as a purported assignment. [144] That contradicts the position adopted by the plaintiffs in the 2014 proceedings in the latter half of 2018, when they contended that the MAFA deed was effective: see [295]-[296] and [373] below. I have found it necessary to say something further about this inconsistency later in these reasons: see [567] below.
The defendants adopt inconsistent positions within the present proceedings concerning the MAFA deed. On the one hand, the defendants plead that they will rely on the terms of the MAFA deed for their true force and effect, that the assignment effected by the MAFA deed was absolute and that the plaintiffs are estopped from disputing the terms and efficacy of the MAFA deed. [145] On the other hand, the defendants read an affidavit of Mr Mahommed in which he deposed that "there was a total failure of consideration under the MAFA Deed, performance of it was breached fundamentally by MAFA and abandoned by MAFA and BAD, that repudiation was accepted by BAD on 23 October 2017" when Mr Dean and BAD Nominees consented to the declarations made by Gleeson JA in the 2017 proceedings, referred to below, that BLE and BAD Nominees had entered into the 2 August 2017 contract. [146]

[19]

Events of December 2016

On 7 December 2016, Mr Smits informed Mr Dean that he was going to have Mr Dean charged with fraud. [148]
The plaintiffs plead that this was a repudiation of the 9 May 2016 documents, in that the statement conveyed that Messrs Smits and Mahommed would not be acting in the best interests of BAD Nominees and would not be acting as fiduciaries of BAD Nominees. [149]
The plaintiffs allege that, after this alleged repudiation, "all parties offered to abandon the [9 May 2016 documents] and the other parties accepted the offer" and that "the objective intention of the parties was to discharge each other of their respective duties and obligations under the [9 May 2016 documents]". The plaintiffs contend that the 9 May 2016 documents were thereby terminated, with the result that Messrs Smits and Mahommed could no longer perform work for BAD Nominees or charge BAD Nominees for work, and any further use of the Power of Attorney "would be an abuse of the power". [150]
The defendants deny that the 9 May 2016 documents were terminated or brought to an end in December 2016. [151] They deny that Mr Smits' statement on 7 December 2016 was contrary to the best interests of BAD Nominees or contrary to any fiduciary duty, or that it constituted a repudiation of the 9 May 2016 documents. In addition, the defendants deny that BAD Nominees accepted any alleged repudiation, and say that the defendants continued to perform work under the 9 May 2016 documents after 7 December 2016. [152]
The plaintiffs' contentions at [154]-[155] above did not feature in their submissions and are therefore taken to have been abandoned.

[20]

Offer made by administrators on 13 June 2017

As a result of negotiations between the administrators and Mr Orlizki (acting on instructions from Mr Dean on behalf of BAD Nominees and also on instructions from MAFA), the administrators wrote to BAD Nominees and MAFA on 13 June 2017 offering a transfer of nine lots of the Beechworth land from BLE (as mortgagee in possession) to BAD Nominees in reduction of BAD Nominees' claim against BLE by $1,000,000, on the basis that BAD Nominees was entitled to prove in the winding up of BLE for the remaining amount of its claim. The lots were identified as lots 16, 17, 18, 30, 47, 48, 49, 73 and 74. [153] It is convenient to refer to these lots as the nine lots.
A copy of the administrators' letter of offer was also sent to Mr Dean, Mr Cohen, Mr Smits and Mr Mahommed. [154]
In these proceedings, the defendants allege that the negotiations that resulted in the administrators' offer of 13 June 2017 were "tortious and illegal" because the MAFA deed had been executed by Mr Dean on behalf of BAD Nominees in order to defeat the interests of Messrs Smits and Mahommed and Vestecorp under the Power of Attorney, Consultancy Services Agreement and IAD. [155] These allegations concerning the MAFA deed are a restatement of the MAFA conspiracy allegation referred to above.
Mr Smits nevertheless took advantage of the offer by writing to the administrators on 14 June 2017 accepting the offer and purporting to direct the administrators to transfer two of the nine lots (lots 48 and 49) to Vestecorp on account of $78,000 allegedly owing by BAD Nominees to Vestecorp under the deeds of assignment of debts dated 9 May 2016 and a further $120,000 allegedly owing to by BAD Nominees to Vestecorp under the Consultancy Agreement. [156]
Later on the same day, Mr Orlizki wrote to the administrators referring to Mr Smits' letter and stating that neither Mr Smits nor Mr Mahommed had authority to act for MAFA or BAD Nominees. [157] On 19 June 2017, Mr Cohen wrote to the administrators confirming Mr Dean's position that Messrs Smits and Mahommed did not have authority to act for BAD Nominees or Mr Dean and therefore had no authority to accept the administrators' offer. [158]
Mr Cohen subsequently made a counter-offer to the administrators on behalf of BAD Nominees on 26 July 2017, which the administrators accepted subject to certain conditions on 2 August 2017. However, before turning to those events, it is necessary to refer to some matters that the plaintiffs allege occurred between Messrs Smits and Mahommed on receipt of the administrators' offer of 13 June 2017.

[21]

The alleged Vestecorp conspiracy: June 2017

The plaintiffs allege that, upon receipt of the administrators' offer, Messrs Smits and Mahommed agreed that: [159] 1. they would resurrect and perform the Attorney conspiracy (see [54]-[58] above); 2. they would claim that Vestecorp was owed $120,000; 3. Mr Smits would act for Vestecorp in recovering the alleged debt; 4. they would use the Power of Attorney to cause BAD Nominees to accept the 13 June 2017 offer; 5. Mr Smits, on behalf of Vestecorp, would demand that lots 48 and 49 be transferred to Vestecorp; 6. they would use the Power of Attorney to procure the transfer of lots 48 and 49 under the pretence that the transfer was to pay BAD Nominees' indebtedness to Vestecorp and to themselves; 7. they would do so despite not knowing the value of lots 48 and 49 but expecting their value to be greater than $120,000 by reason that they knew that if the nine lots were worth approximately $1,000,000 then each individual lot was worth approximately $111,000; and 8. they would not inform Mr Dean of their intention to transfer lots 48 and 49 and, when Mr Dean discovered this, they would claim that their fees were greater than the value of the lots.
The plaintiffs refer to this as the Vestecorp conspiracy.
Messrs Smits and Mahommed deny entering into any such agreement. [160]
In addition, Messrs Smits and Mahommed plead that: 1. the debts referred to in Mr Smits' 14 June 2017 letter were or would become payable by BAD Nominees as trustee of the Dean Super Fund to Vestecorp under the Consultancy Agreement and to Mr Mahommed under the deeds of assignment of debt dated 9 May 2016; [161] 2. they held genuine reservations about the prospects of BAD Nominees recovering any secured debt in excess of the $1,000,000 to be written down in exchange for the transfer of the nine lots under the 13 June 2017 offer; [162] 3. BAD Nominees had no apparent means of paying debts owing, or future debts, to Vestecorp and Mr Mahommed, so they were willing to compromise by accepting the transfer of lots 48 and 49 from the BLE administrators "in lieu of full payment" from BAD Nominees or Mr Dean; [163] 4. the amount that would be recovered from the sale of lots 48 and 49 was doubtful; [164] and 5. the plaintiffs' allegation that Messrs Smits and Mahommed deliberately did not inform Mr Dean of their intention to transfer lots 48 and 49 to Vestecorp and to claim excessive fees greater than the value of the lots when Mr Dean discovered the transfer, is false. [165]

[22]

Alleged retainer of Mr Smits: June 2017

The plaintiffs allege that, upon receipt of the letter of offer dated 13 June 2017 from the administrators of BLE, Mr Smits and Mr Mahommed also agreed that Mr Smits would be retained as a lawyer for himself, Mr Mahommed, Vestecorp and BAD Nominees on terms that Mr Smits would charge BAD Nominees exclusively for all of the work done for any of those clients and without regard to whether the charges were reasonable, fair or proportionate. The plaintiffs allege that the retainer was not recorded in writing and was not the subject of any written costs disclosure pursuant to s 174 of the Legal Profession Uniform Law. [166]
The plaintiffs allege that the June 2017 retainer was entered into in breach of fiduciary duty and in breach of the terms of the Power of Attorney because: [167] 1. there was a conflict between the interests of Mr Dean and BAD Nominees on the one hand and Messrs Smits and Mahommed on the other hand; 2. it involved a use of the Power of Attorney for the benefit of the attorneys without express authorisation from BAD Nominees to do so; 3. the attorneys were acting in their own interests in entering into the June 2017 retainer in furtherance of the alleged Vestecorp conspiracy; and 4. the entry into the June 2017 retainer was a dishonest act concerning the legal and financial affairs of BAD Nominees in that the retainer was created for the benefit of Messrs Smits and Mahommed.
The plaintiffs also allege that the Power of Attorney did not authorise the attorneys to enter into the June 2017 retainer and that it was a fraud on the power for them to do so because they were using the Power of Attorney in furtherance of the alleged Vestecorp conspiracy rather than for the benefit of BAD Nominees. [168]
The plaintiffs contend that, by reason of the alleged breaches of fiduciary duty and fraud on the power referred to above, the June 2017 retainer is "void, voidable and rescinded". [169]
The plaintiffs also contend that, because the attorneys breached the terms of the Power of Attorney in entering into the alleged June 2017 retainer, Mr Smits should be enjoined from enforcing that retainer because he cannot rely on his own wrong. [170]
The plaintiffs plead that the written retainers subsequently entered into between BAD Nominees and Mr Smits (in his capacity as a solicitor) evidence or record the alleged June 2017 retainer, and that those written retainer agreements are therefore also rescinded with the consequence that Mr Smits is not entitled to charge fees for legal services to BAD Nominees. [171]

[23]

Agreement for the transfer of the nine lots to BAD Nominees: 2 August 2017

On 26 July 2017, Mr Cohen sent a letter to the administrators on behalf of BAD Nominees offering to accept the transfer of the nine lots from BLE (as mortgagee in possession) to BAD Nominees in consideration for a reduction of BAD Nominees' claim against BLE in the amount of $1,000,000. The terms of the offer set out in the letter were as follows: [175] "1. Lots 16, 17, 18, 30, 47, 48, 49, 73 and 74. ('Subject Lots') are transferred by the Company (as mortgagee-in-possession) to BAD or its nominee in reduction of the amount of BAD's claim against the Company in the amount of $1,000,000.00 ('Amount'). 2. If a distribution is likely in a winding-up of the Company, BAD (or its assignee, as the case may be) may prove in the liquidation for the difference between the Amount and the quantum of the BAD claim against the Company, as adjudicated by the Liquidators of the Company. 3. The Administrators may take immediate steps to sell the balance of the lots (namely lots 28, 29, 54, 60, 68, 69, 70, 76 and 77 ('Remaining Lots') at their discretion. 4. So as not to saturate the market BAD and its nominee will not take any steps to sell the Subject Lots before 31 October 2017 or such earlier date from advice from the Administrators that the Remaining Lots have been sold. 5. BAD will consent to the Administrators' ultimate appointment as Liquidators and will procure the agreement of any valid nominee to consent to the Administrators' ultimate appointment as Liquidators. 6. The rights of BAD to maintain its claim to the balance of the BAD debt, its claim in relation to the BAD security interest and the priority of that security interest as against the Administrators' statutory and other rights of indemnity in respect of their remuneration and expenses are preserved. 7. This offer may be accepted subject to a condition that the Administrators obtain orders of the Supreme Court under section 447A of the Corporations Act, or directions under section 447D of the Corporations Act, prior to completion. 8. This offer is open for acceptance until 4pm, 3 August 2017 unless withdrawn earlier on 2 business days' notice."
On 2 August 2017, the administrators' solicitor wrote to Mr Cohen accepting the offer subject to the condition that: [176] "… the administrators and the company obtain appropriate relief from the Court that (amongst other things) finally determines: (i) the validity of Mr Smits' letter dated 14 June 2017 (copy attached); (ii) that the Offer was validly made on behalf of BAD Nominees (NSW) Pty Ltd; and (iii) that the Administrators and the company are otherwise able to sell/transfer the lots without breaking any legal obligation (including any contract and the terms of any security) and give such title to the lots as the Offer contemplates. On that basis, we are instructed to prepare the necessary Court application, which will be filed and served on you (amongst others) in due course."

[24]

2017 proceedings

On 14 September 2017, the administrators commenced proceeding 2017/279755 in this Court seeking the following relief against BAD Nominees (the 2017 proceedings): [177] "2. A declaration that [BLE] and [BAD Nominees] have entered into a contract on the terms of the communications dated 26 July 2017 and 2 August 2017 … 3. A declaration that [BLE] is authorised to sell the properties identified in Schedule A hereto to [BAD Nominees]."
Schedule A to the originating process set out the title references to the nine lots. [178]
Two notices of appearance were filed in the 2017 proceedings on behalf of BAD Nominees - one by Mr Cohen on the instructions of Mr Dean, and one by Mr Smits on the instructions of Mr Mahommed, relying on the Power of Attorney.
It was in this context that the Power of Attorney was registered on 20 September 2017, as I have mentioned at [77] above.
On 29 September 2017, Mr Cohen filed an interlocutory process on behalf of BAD Nominees in the 2017 proceedings seeking the following relief: [179] "1. An Order, to the extent necessary, that Leonardus Gerardus Smits, Peter Shah Mahommed and Vestecorp Financial Services Pty Ltd ACN 003 856 442 be joined as Defendants. 2. A Declaration that Leonardus Gerardus Smits is not validly retained by BAD to appear for and act on its behalf in these proceedings. 3. An Order setting aside the notice of appearance filed by Leonardus Gerardus Smits on behalf of BAD. 4. An order restraining Leonardus Gerardus Smits, Peter Shah Mahommed and Vestecorp Financial Services Pty Ltd ACN 003 856 442 and each of them from holding themselves out as being an authorised representative or attorney of BAD and from purporting to bind or commit BAD to any agreement, commitment or liability until further Order. 5. A declaration that the documents described as: (i) General Power of Attorney between BAD and Leonardus Gerardus Smits and Peter Shah Mahommed executed 9 May 2016; and (ii) Irrevocable Authorisation and Direction, (collectively the "Instrument of Appointment") are not valid or binding on BAD. 6. Alternatively, a Declaration that the Instrument of Appointment was validly revoked by notice given on 31 May 2016. 7. Further in the alternative, an Order that the Instrument of Appointment be terminated pursuant to S.28 Powers of Attorney Act 2003 (NSW) and that the Instrument of Appointment be delivered up for cancellation. …"

[25]

Solicitors instructed to act for BAD Nominees in relation to the transfer of the nine lots

On 18 January 2018, Mr Cohen (on behalf of BAD Nominees and Mr Dean) retained Mr Tony Bennett, solicitor, to act on the transfer of the nine lots from BLE as mortgagee in possession to BAD Nominees. Mr Bennett's firm is Law Albury Wodonga. [193]
On or about 2 February 2018, Mr Bennett received a market-based appraisal of the value of the nine lots. The value of each individual lot varied from between $90,000 and $120,000 and the aggregate value was $923,000. The document emphasised that this was not a valuation but "merely an estimation of possible market interest". [194]

[26]

Winding up of BLE

As I have referred to earlier in these reasons, BLE went into liquidation on 21 February 2018. Mr Cussen was appointed as liquidator.

[27]

Power of Attorney held to be irrevocable: 23 February 2018

The two interlocutory processes filed in the 2017 proceedings to which I have referred at [183] and [185] above were heard before Brereton J (as his Honour then was) on 22 February 2018. [195]
Mr Cashion SC and Mr Darvall of counsel appeared for BAD Nominees (on the instructions of Mr Cohen) and for Mr Dean and Mr Cohen. Mr Smits appeared for Mr Mahommed. [196]
The submissions made by Mr Cashion SC were directed to the contentions that the Power of Attorney was revocable and that it had been validly revoked on 31 May 2016, with the result that the subsequent retainer of Mr Smits on 14 September 2017 was null and void. [197] In the context of making submissions about those matters, Mr Cashion SC addressed whether the Power of Attorney was coupled with an interest. [198]
No submissions were directed to the propositions that the Power of Attorney and IAD were not valid or binding on BAD Nominees or that the Power of Attorney should be terminated pursuant to s 28 of the Powers of Attorney Act. I infer that a decision was made on behalf of Mr Dean not to pursue these issues and the claims for relief in paragraphs 5 and 7 of the interlocutory process referred to at [183] above. I note that the transcript suggests this was communicated to Messrs Smits and Mahommed in the written submissions served shortly before the hearing of the interlocutory process. Mr Cashion SC acknowledged that, the parties' affidavit evidence was of limited significance in light of the narrower scope of the issues being pressed on behalf of Mr Dean. [199]
The only argument advanced by Mr Cashion SC in the event that the Power of Attorney was held to be irrevocable or not to have been validly revoked on 31 May 2016 was that Mr Dean enjoyed a right to retain solicitors on behalf of BAD Nominees concurrently with Mr Mahommed's right to do so under the Power of Attorney. One of the matters raised by Mr Cashion SC as being relevant to the Court's discretion whether to permit concurrent retainers of solicitors for BAD Nominees in those circumstances was that "there is a degree of animosity, acrimony, dissatisfaction, disharmony between Mr Dean and BAD on the one hand, and Mr Smits and Mr Mahommed on the other". [200]
The affidavits of Mr Dean sworn on 29 September 2017 and 9 October 2017, and the affidavits of Messrs Conlon and Armstrong were not read but were merely tendered on the basis that their use was limited pursuant to s 136 of the Evidence Act 2005 (NSW) to evidence of the fact that the deponents had sworn to the truth of the facts in those affidavits, and not as evidence of the truth of those facts themselves. [201]

[28]

The alleged Garslev conspiracy

The plaintiffs allege that, upon Brereton J making the orders referred to above on 23 February 2018, Mr Smits, Mr Mahommed, Mr J Smits, Vestecorp and Garslev agreed that: [214] 1. Messrs Smits and Mahommed would use the Power of Attorney to transfer the nine lots to Garslev; 2. Garslev would immediately sell the nine lots; 3. Garslev would use the proceeds of sale of those lots to fund the Yeppoon development; 4. Messrs Smits and Mahommed would continue to manage the Yeppoon development for Garslev; 5. Messrs Smits and Mahommed would receive the profit made by Garslev from the Yeppoon development, with the profit to be calculated on the basis that the money raised by Garslev from the sale of the nine lots was to be treated as a capital investment by them in the Yeppoon development; 6. Messrs Smits and Mahommed would claim that they were owed over $850,000 in fees by BAD Nominees, and would claim that the nine lots were worth $850,000 rather than the $1,000,000 value attributed to them in the 2 August 2017 contract. These claims would be made in order to justify the assignment to Garslev for $850,000, notwithstanding that Messrs Smits and Mahommed expected that the nine lots would sell for an aggregate price of greater than $1,000,000; 7. BAD Nominees would receive no benefit from the transfer of the nine lots because the defendants would "take all that they could and leave BAD Nominees with nothing"; 8. the result for BAD Nominees would be that it paid for the recovery of the nine lots but would receive no benefit from that recovery, and that benefit would be received solely by Messrs Smits and Mahommed; 9. they would not tell Mr Dean about any of the above, because if Mr Dean knew he would prevent the agreement being put into effect.
The plaintiffs allege that the Garslev conspiracy was: [215] 1. made for the purpose of taking land worth in excess of $1,000,000 from BAD Nominees, without paying any compensation for the value of that land; 2. made with the intention that Garslev would obtain indefeasibility of title, thereby depriving BAD Nominees of the right to recover the nine lots or the value of the nine lots; and 3. was a dishonest and fraudulent design, invoking the second limb of Barnes v Addy.
The plaintiffs characterise the alleged Garslev conspiracy as a conspiracy to injure BAD Nominees by unlawful means, namely by breach of contract and breach of fiduciary duty. [216]

[29]

Assignment from BAD Nominees to Garslev: 20 March 2018

On 20 March 2018, BAD Nominees entered into a deed of assignment with Garslev pursuant to which it assigned to Garslev all of its rights, title and interest to and in respect of the 2 August 2017 contract, the February 2013 loan and the February 2013 security, the orders made in the 2017 proceedings on 23 October 2017 in respect of the 2 August 2017 contract, and all debts, claims and rights of action of BAD Nominees against Mr Dean, Mr Conlon or any other lawyers or tax accountants of BAD Nominees (the 20 March 2018 deed). BAD Nominees also undertook to nominate Garslev as the transferee under the 2 August 2017 contract. [234]
The plaintiffs allege that the value of the February 2013 security assigned to Garslev under the 20 March 2018 deed was unknown, but say that it secured a debt greater than $2.5 million. The value of the February 2013 security would depend on the amount realised by the BLE liquidator from the sale of the other lots of the Beechworth land after deducting the administrators' remuneration and disbursements. [235] The defendants' pleading concerning the value of the February 2013 security is incoherent and rambling. The key contentions that can be extracted from it are that the February 2013 security had a negligible or illusory value and did not in fact secure any debt owing by BLE to BAD Nominees as a result of the administrators' sale of the secured property and that the administrators' right of indemnity in respect of their remuneration had priority over any amounts owing to BAD Nominees (contrary to the arguments that Messrs Smits and Mahommed pressed on the administrators at the time). [236]
Garslev agreed to "pay or to guarantee in aggregate" the sum of $850,000 to BAD Nominees "or to such recipients as are or may be authorised or directed by [BAD Nominees] herein or otherwise by any attorney, representative, agent or officer of [BAD Nominees]" as and when directed in writing. [237]
The 20 March 2018 deed expressly provided that such payment may be made in cash or "by offset, debt consolidation, assignment, extinction of claims, assignments of debts or indemnity or otherwise as determined or agreed to be ratified at any time by [Garslev]." [238]
Clause 3 then set out a long list of alleged obligations or future obligations of BAD Nominees that Garslev was authorised to "pay, settle or satisfy or indemnify [BAD Nominees]" and provided for any such amounts paid, settled, satisfied or indemnified to be deducted from the $850,000 otherwise payable to BAD Nominees in respect of the transfer of the nine lots and the securities and other interests referred to above. [239]

[30]

Threatened referral to the Australian Taxation Office

On 27 June 2018, Mr Mahommed (acting or purportedly acting in his capacity as attorney for BAD Nominees) wrote to Mr Dean as sole director of BAD Nominees asserting that the supply of the nine lots is subject to GST, and that the GST is "a Trust Debt of the Super Fund". The letter requested Mr Dean's urgent response concerning the asserted GST liability and payment of the GST to the Australian Taxation Office, failing which "we will advise the ATO that you are the sole director, personally liable to pay the GST, general interest charges, penalties and fines". The letter then stated that "we will at least retain sufficient moneys to satisfy any such liabilities or exposures in the absence of a satisfactory reply and clearance from the ATO" and "[we] will also request the ATO to audit the Super Fund for compliance purposes and considering the apparent non-disclosure of loans or deemed loans to yourself from the trustee, in the sense that it might have lost its 'complying' status." The letter continued to complain about the attorneys' "limited knowledge of the taxation affairs of the Super Fund Trustee" and to request "full access to all relevant taxation records held by your Tax Accountants". [267]
I note that the letter failed to mention that Mr Mahommed had caused BAD Nominees to enter into the 20 March 2018 deed, assigning its rights under the 2 August 2017 contract to Garslev and undertaking to nominate Garslev as the purchaser of those nine lots under that contract. The letter also failed to mention that Mr Mahommed had executed the documents to give effect to the nomination of Garslev as purchaser on 13 June 2018. [268]
The plaintiffs allege that, by writing to Mr Dean in these terms, Mr Mahommed was using the Power of Attorney to threaten Mr Dean, with the purpose of intimidating him and cowering him in furtherance of the Garslev conspiracy. [269]
The defendants contend that it was appropriate for Mr Mahommed to write the letter having regard to the alleged conduct of Mr Dean referred to at [245] above, which the defendants say exposed Messrs Smits and Mahommed to the risk of personal liability, and that it was within the scope of their powers under the Power of Attorney to write the letter. They deny that the letter was written to intimidate and cower Mr Dean. [270]

[31]

Nine lots transferred to Garslev: July 2018

On 13 June 2018, Mr Mahommed, with the knowledge of Mr Smits, used the Power of Attorney to nominate Garslev as the transferee of the nine lots under the 2 August 2017 contract. [271]
The plaintiffs allege, and the defendants deny, that Messrs Smits and Mahommed did not inform Mr Dean of the nomination. [272]
The plaintiffs allege, and the defendants deny, that the nomination was made in furtherance of the Garslev conspiracy, in breach of fiduciary duties owed by Messrs Smits and Mahommed to BAD Nominees, beyond and outside the scope of the Power of Attorney and a fraud on the power. The plaintiffs allege, and the defendants deny, that Garslev accepted the nomination in furtherance of the Garslev conspiracy and that Mr J Smits and Garslev procured the breach of the Power of Attorney, breach of fiduciary duties and fraud on the power. [273]
The plaintiffs plead, and the defendants deny, that the defendants are therefore liable to pay equitable compensation for the loss suffered by BAD Nominees as a result of the nomination and subsequent transfer of the nine lots to Garslev. [274]
In the course of denying the plaintiffs' allegations, the defendants plead that BAD Nominees had no interest in or capacity to acquire the nine lots "which it could not acquire by reason of its hopeless impecuniosity" and by reason of the matters referred to at [245] above and whilst BAD Nominees was in "fundamental breach and breach of essential conditions of" the 9 May 2016 documents. Messrs Smits and Mahommed also plead that: 1. the benefits that they and other alleged creditors of the Dean Super Fund obtained from the 20 March 2018 deed were not "impugnable" in circumstances where BAD Nominees was not performing its obligations under the 2 August 2017 contract, the Consultancy Agreement, the IAD, Mr Smits' retainers or the Dean Super Fund Trust Deed, BAD Nominees and Mr Dean were not complying with their obligations under the Superannuation Industry Supervision Act, related provisions in the Income Tax Assessment Act and/or ss 180-184 and 197 of the Corporations Act, and Mr Dean was engaged in the conduct referred to at [245] above; [275] and 2. in causing BAD Nominees to enter into the 20 March 2018 deed, the Power of Attorney was not used in furtherance of the alleged Garslev conspiracy (which the defendants deny existed), but was used for the benefit of creditors of the Dean Super Fund by causing BAD Nominees to deal with the nine lots in accordance with the 2 August 2017 contract and in accordance with the rights of creditors of the Dean Super Fund and so as to overcome or thwart the alleged conduct referred to at [245]. [276]

[32]

Appointment of Overdean as trustee of Dean Super Fund, resulting proceedings and Mr Dean's discovery of the involvement of Garslev: 5 September - 9 November 2018

On 5 September 2018, Mr Dean in his capacity as sole beneficiary of the Dean Super Fund signed a document entitled "Removal of Trustee" and a Deed of Retirement and Appointment of Trustee of Discretionary Trust pursuant to which BAD Nominees was removed and Overdean was appointed as the trustee of the Dean Super Fund. [291]
On 10 September 2018, Overdean lodged caveats in respect of the nine lots, claiming an interest under an agreement with BLE dated 1 February 2013. [292]
On 13 September 2018, Overdean wrote to Messrs Smits and Mahommed, and various other persons, advising that it had been appointed as the trustee of the Dean Super Fund. [293]
On 26 September 2018, Overdean filed an interlocutory process in the 2014 proceedings seeking a declaration that it is the trustee of the Dean Super Fund and a consequential order that the property of the Dean Super Fund be vested in Overdean pursuant to s 71 of the Trustee Act 1925 (NSW). [294] Mr Dean swore an affidavit in support of the interlocutory process deposing as to the meeting of the members of the Dean Super Fund at which he (as sole member) had resolved to remove BAD Nominees and appoint Overdean as the trustee, the execution of the document referred to above and the notification of Messrs Smits and Mahommed and various other persons, including the liquidator of BLE, of the change in trustee. [295]
At this time, a series of interlocutory processes and affidavits had also been filed in the 2014 proceedings concerning a dispute about the priorities as between secured creditors of BLE, and between the claims of those secured creditors and the claims of former administrators of BLE, on any net proceeds of sale of the Beechworth land (excluding the nine lots that were the subject of the 2 August 2017 contract). In addition, there were extant applications for security for costs by various parties to these interlocutory processes. I refer to these applications within the 2014 proceedings later in these reasons. For present purposes, it is relevant to note two developments concerning those applications.
First, on 5 October 2018, the liquidator of BLE filed and served an affidavit of Mr Andrew Sutherland, the partner of the firm Russells who then had the day-to-day carriage of the matter on behalf of the liquidator. [296] It appears from an affidavit subsequently sworn by Mr Dean on 18 October 2018 that Mr Sutherland's affidavit alerted him to the fact that the titles to the nine lots had been transferred to Garslev.

[33]

Alleged conspiracy involving Mr Dean and his advisers

Messrs Smits and Mahommed and Vestecorp allege that they discovered during the course of their performance of the Consultancy Agreement and Mr Smits' performance of his retainers as a solicitor for BAD Nominees that Mr Dean had combined or agreed with Mr Conlon, Mr Huxley, Mr Orlizki and/or Mr Batiste to achieve a dishonest purpose or design, namely for Mr Dean to receive for his own benefit all monies due to the Dean Super Fund or BAD Nominees in order to defeat the interests and rights of Messrs Smits and Mahommed and Vestecorp and other alleged creditors of the Dean Super Fund. They allege that the steps taken to achieve this dishonest purpose and design included: [321] 1. concealing or not accounting for the ultimate disposition of monies received or paid by BAD Nominees or the Dean Super Fund, delaying or refusing to make payments due to creditors of the Dean Super Fund (including amounts allegedly owing to Messrs Smits and Mahommed and Vestecorp under the Consultancy Agreement, the IAD and retainer agreements between Mr Smits and BAD Nominees); 2. acting in furtherance of the alleged MAFA conspiracy referred to at [150]-[151] above; 3. taking proceedings to remove or preclude Messrs Smits and Mahommed from acting on behalf of BAD Nominees; 4. not compromising or otherwise satisfying or settling liabilities of the Dean Super Fund, contrary to the contractual obligations of BAD Nominees as trustee of that fund in in breach of s 197 of the Corporations Act; 5. causing BAD Nominees to trade whilst insolvent; 6. failing to provide any financial, banking or trust records, accounts or statements to Messrs Smits and Mahommed as attorneys for BAD Nominees or to Mr Smits as legal representative of BAD Nominees; 7. removing BAD Nominees and appointing Overdean as the trustee of the Dean Super Fund on 5 September 2018; and 8. not complying with the requirements of the Superannuation Industry (Supervision) Act and income tax legislation, including by entering into arrangements to "strip the [Dean Super Fund] of trust assets or assessable income or to engage in illegal income tax reduction or avoidance arrangements".
Messrs Smits and Mahommed and Vestecorp plead that the alleged non-compliance with the requirements of the Superannuation Industry (Supervision) Act and income tax legislation referred to immediately above exposed them to losses and personal liability under s 444-15 of the Schedule 1 to the Taxation Administration Act 1953 (Cth), for causing losses to the Commonwealth and for having obtained dishonestly or by deception a financial advantage contrary to s 134.2 of the Criminal Code Act 1995 (Cth). [322]

[34]

Alleged termination of Consultancy Agreement: 31 October 2018

On 31 October 2018, Kekatos Lawyers sent an email to Mr Smits in the following terms: [324] "Pursuant to clause 6 of the Consultancy Agreement entered on 5 May 2016, we advise you that our client Brian Dean, director of Overdean Developments Pty Ltd and director of BAD Nominees Pty Ltd, terminates the agreement as principal."
On the pleadings, there is a dispute between the parties as to the validity of the termination notice and, if valid, the effect of the notice.
The plaintiffs plead that BAD Nominees was entitled to terminate the Consultancy Agreement: [325] 1. in accordance with clause 6 of the Consultancy Agreement; and/or 2. by way of acceptance of the repudiation of the Consultancy Agreement by Vestecorp and Mr Smits by reason of the Vestecorp conspiracy and the Garslev conspiracy.
The plaintiffs plead that, as a consequence of termination, Vestecorp could no longer charge for consultancy services and any work done by Mr Smits as a solicitor was no longer on the instructions of BAD Nominees. [326] Moreover, the termination of the Consultancy Agreement had the effect that the attorneys no longer had power to act for BAD Nominees under the Power of Attorney because the purpose of the Power of Attorney was for the attorneys to act as agent for BAD Nominees for the purpose of performing the Consultancy Agreement. [327]
The defendants deny these allegations on numerous grounds. However, it is not necessary to refer to those grounds because the plaintiffs' pleaded contentions referred to above did not feature in their written or oral submissions and are therefore taken to have been abandoned.

[35]

Garslev registered as proprietor of the nine lots: 5 November 2018

On 5 November 2018, Garslev became the registered proprietor of the nine lots. [328]
The plaintiffs allege, and the defendants deny, that Garslev obtained registered title to the nine lots by reason of the Garslev conspiracy, which was a dishonest and fraudulent design and a fraud within the meaning of s 42 of the Transfer of Land Act 1958 (Vic). [329]
The plaintiffs also allege that Garslev held the title to the nine lots on trust for BAD Nominees, that the proceeds of sale of the nine lots are held by Garslev on trust for BAD Nominees and that Garslev cannot set up indefeasibility of title as a defence to any obligation to account to BAD Nominees for those sale proceeds. [330]
The defendants deny these allegations. [331] In particular, the defendants say that: 1. the plaintiffs pleaded in the 2014 proceedings that BAD Nominees had assigned all of its proprietary right, title and interests in the nine lots and the February 2013 security to MAFA, and they are therefore estopped from asserting otherwise in these proceedings; [332] 2. the plaintiffs conducted the hearings before Black J and Parker J in the 2014 proceedings on the basis that Overdean had replaced BAD Nominees as the trustee of the Dean Super Fund and that Overdean therefore had the exclusive right to sue as trustee of the Dean Super Fund, and the plaintiffs are therefore estopped from asserting otherwise in these proceedings; [333] 3. estoppels created by the judgment and orders of Gleeson JA on 23 and 25 October 2017, the judgment and orders of Brereton J on 23 February 2018, the judgment and orders of Black J on 9 November 2018 preclude the plaintiffs from claiming in these proceedings that Garslev held the title to the nine lots on trust for BAD Nominees, that the proceeds of sale of the nine lots are held by Garslev on trust for BAD Nominees and that Garslev cannot set up indefeasibility of title as a defence to any obligation to account to BAD Nominees for those sale proceeds; [334] 4. claims that the plaintiffs are estopped from claiming that Garslev held the nine lots on trust for BAD Nominees because the plaintiffs were aware of the disposition of the nine lots to Garslev since mid-2018 but acquiesced in the disposition of those lots by the liquidator of BLE to Garslev under the 2 August 2017 contract and took no steps to have that disposition set aside until the commencement of these proceedings on 13 December 2018; [335] and 5. in circumstances where BAD Nominees ceased to be the trustee of the Dean Super Fund on 5 September 2018, the plaintiffs cannot maintain the allegation that Garslev held the title to the nine lots and holds the proceeds of sale on trust for BAD Nominees and is obliged to account to BAD Nominees for those sale proceeds. [336]

[36]

The Garslev deeds: 5 November 2018

On or about 5 November 2018, Mr Mahommed signed a deed of assignment as attorney for BAD Nominees under the Power of Attorney. The deed described BAD Nominees as "the Debtor". The other parties to the deed were Garslev (described as "the Assignee"), Mr Mahommed (described as "the Attorney") and Mr Smits (described as "the Assignor"). [338] It is convenient to refer to this deed as the 5 November 2018 deed of assignment.
It will be recalled that the 20 March 2018 deed provided for the $850,000 to be paid or guaranteed by Garslev to BAD Nominees for the nine lots to be made by Garslev paying, settling, guaranteeing or indemnifying BAD Nominees in respect of various alleged debts or obligations or future debts or obligations of BAD Nominees, including amounts invoiced to BAD Nominees and determined by Garslev in its absolute discretion to be debts of BAD Nominees: see [231]-[240] above.
The recitals to the 5 November 2018 deed of assignment stated: "A. BAD and Garslev are parties to a Deed of Assignment made on 20 March 2018 ('the DOA') under which Garslev was and remains entitled or empowered to pay or satisfy, appropriate or novate and set off or extinguish payments, debts or liabilities due, owing or payable to creditors of BAD in order to satisfy or settlement [sic] payment of consideration due, owing or payable under that Deed. B. On 5 November 2018, Garslev became the registered owner of nine titles of land at Beechworth in Victoria pursuant to the DOA and the BAD Contract referred to therein. C. Contemporaneously, the parties agreed to settle completion of the DOA in respect of the executory rights and obligations created by or under the DOA, inter alia, through the execution of this Deed and reductions to the said consideration as indicated in Recital A above. D. Leo Smits has informed Garslev that substantial moneys and debts are and will become due, owing or payable by BAD to Leo Smits under Legal Retainer Agreements or Costs Agreements ('LRA s') in respect of legal matters and proceedings ('LRA Debts'). E. Leo Smits has agreed to assign absolutely to Garslev the LRA Debts in consideration of Garslev agreeing to pay to him equivalent amounts out of the net proceeds of realisation of Lot 203, comprising future lots 28-37 & 41-47, in L201 on SP 251139 at Waterview & Yarrow Drives and Gardener Street at Lammemoor Heights in Yeppoon, as approved for Subdivision by Livingstone Shire Council ('Yeppoon Lots'), subject to prior payment or re-payment of any costs, charges, expenses and liabilities paid or incurred by Garslev in respect of the Yeppoon Lots after the date of this Deed."

[37]

Priority dispute between administrators and secured creditors under the February 2013 security: August - December 2018

As referred to at [278] above, the transfer of the nine lots to Garslev as nominee under the 2 August 2017 contract on 17 July 2018 did not extinguish the debt owed by BLE to BAD Nominees under the February 2013 loan and security. It is not clear from the evidence what amount remained owing to BAD Nominees after the reduction of $1,000,000 in its claim in accordance with the 2 August 2017 contract. The liquidator's statutory report to creditors dated 18 May 2018 recorded that the liquidator had been advised by various parties acting for BAD Nominees that the debt was between $1.2 million and $2.2 million before the $1,000,000 reduction. [360] Interest was accruing on the amount owing.
As referred to at [283] above, a dispute emerged between BAD Nominees and other secured creditors of BLE on the one hand, and the former administrators of BLE on the other hand, concerning priorities between amounts owing to those secured creditors and the remuneration of the former administrators. It was clear from the liquidator's statutory report to creditors dated 18 May 2018 that, if the administrators' claim for disbursements (including legal costs) and remuneration took priority over the claims of secured creditors, the available funds would not be sufficient to pay the administrators' remuneration (or the liquidator's estimated fees) and there would be no funds available for distribution to creditors, including BAD Nominees. [361]
The dispute played out through a series of applications filed in the 2014 proceedings.
There was an application by the former administrators of BLE for payment of their remuneration and expenses out of the assets of BLE. [362]
In addition, Kekatos Lawyers had filed an interlocutory process on behalf of MAFA on 6 August 2018 claiming an order that the money held by the administrators of BLE is charged for the payment of $2,031,826 to MAFA and an order that the administrators pay that sum to MAFA. The orders were sought against the former administrators, even though the administration had come to an end and the liquidator had been appointed on 21 February 2018. [363]
As referred to at [301] above, Mr Cohen (acting on behalf of Mr Dean) had advised Mr Mahommed on 6 April 2018 that the MAFA deed had "expired". In these proceedings, the plaintiffs plead that MAFA filed the interlocutory process on 6 August 2018 with Mr Dean's approval on the basis that any such surplus would be paid to Mr Dean "as a means of defeating Smits and Vestecorp". [364] The defendants contend that this aspect of the plaintiffs' pleading is an admission by the plaintiffs that the purpose of MAFA's involvement in the priority dispute in the 2014 proceedings was to defraud creditors of the Dean Super Fund. [365]

[38]

Developments immediately following the conclusion of the hearing before Parker J on 12 December 2018

The hearing before Parker J concerning the priority disputes referred to above concluded on 12 December 2018.
On the same day, Overdean lodged a caveat over the nine lots claiming an interest in the freehold estate under an implied, resulting or constructive trust. [383]
On 13 December 2018, the present proceedings were commenced.
On 14 December 2018, Garslev signed a power of attorney in favour of Mr Mahommed stated to be irrevocable for three years and authorising him to, inter alia, approve, receive and/or direct payment of any charges levied to BAD Nominees under the Consultancy Agreement, the IAD or the retainer agreements between Mr Smits and BAD Nominees. [384]
On 15 December 2018, Halliday solicitors wrote to the Land Titles Office on behalf of Garslev requesting immediate removal of Overdean's caveat lodged on 12 December 2018. The letter stated that the caveat was impeding settlements of the sales of the properties that Garslev had entered into with "arms length purchasers for valuable consideration without notice of the Trust or any caveatable estate or interest claimed by Overdean". The letter also stated: [385] "Garslev is a substantial, asset rich property developer, engaged in a major civil construction project in Yeppoon, progress of which is likely to be imploded imminently by the second Caveat [referring to the caveat lodged on 12 December 2018] if the subject sales do not proceed to settlement."
On 18 December 2018, Mr Smits signed an Australian legal practitioner's certificate under s 89A of the Transfer of Land Act certifying that, in his opinion, Overdean does not have the estate or interest claimed in the caveat lodged on 12 December 2018. [386]
On 10 January 2019, an interim order was made in the current proceedings restraining dealings with the nine lots. [387]
On 1 February 2019, Lindsay J extended that interim injunction until further order on the basis of the usual undertaking as to damages given by the plaintiffs subject to additional orders that permitted Garslev to sell and complete the contracts for sale of the lots that were the subject of the injunction provided that Garslev, Mr Smits and Mr J Smits cause the net proceeds of sale to be paid into court save for a sum of $245,000 which they were entitled to withhold. They were required to provide the plaintiffs with a written statement accounting for the expenditure of the $245,000 and the Court noted the parties' agreement that "[Garslev's] land is charged for repayment of the $245,000 should it transpire that the trustee of the Dean Super Fund is not indebted to any of the defendants for the sum of $245,000 or more". [388]

[39]

Issues raised by defendants concerning standing and whether the plaintiffs are estopped from maintaining their claims in these proceedings

When the current proceedings were commenced, the plaintiffs named BAD Nominees as a defendant rather than as a plaintiff because Messrs Smits and Mahommed maintained that the Power of Attorney precluded BAD Nominees from engaging legal practitioners. Messrs Smits and Mahommed maintain that BAD Nominees was indeed precluded from engaging other legal practitioners "in competition with" Mr Smits whilst the Power of Attorney remained on foot. The defendants deny the allegation that this stance was taken for the purpose of the Garslev conspiracy. [390]
The defendants' pleading complains about the change of status of BAD Nominees from a defendant to a plaintiff in these proceedings after the expiry of the term of the Power of Attorney in May 2019. [391] This complaint did not receive any attention in the submissions ultimately pressed by the defendants [392] and it is therefore not necessary to say anything further about it.
The defendants/cross-claimants contend that the plaintiffs/cross-defendants do not have standing to maintain the claims pleaded against them in these proceedings, that the plaintiffs are estopped from maintaining the claims made in these proceedings, that the proceedings are an abuse of process and that the prosecution of the proceedings has caused loss and damage to the defendants/cross-claimants that is compensable under, inter alia, s 68 of the Supreme Court Act 1970 (NSW). [393] This is denied by the plaintiffs/cross-defendants.
The substance of the defendants' contentions in relation to standing, estoppel, and abuse of process, as maintained in the submissions ultimately pressed, [394] may be summarised as follows.
First, the defendants say that no plaintiff has suffered any relevant loss because the benefit of the February 2013 security was assigned to MAFA under the MAFA deed. The defendants rely on Overdean's contention in the hearings before Parker J in the 2014 proceedings in December 2018 that BAD Nominees' rights under the February 2013 had been effectively assigned to MAFA on 10 August 2016. [395] As I have already mentioned at [320(1)] above, the defendants say that the plaintiffs are estopped from departing from that contention in these proceedings. The defendants contend that, as a result of the MAFA deed, no moneys have been owing to BAD Nominees under the February 2013 security since 10 August 2016. [396]

[40]

Mr Smits' status as a solicitor

Mr Smits became a bankrupt on 19 January 2016. [414] At that time, he had not held a practising certificate for some years.
On 7 February 2017, Mr Smits was granted a practising certificate by the Queensland Law Society. [415] Mr Smits remained a bankrupt at that time. His bankruptcy was subsequently annulled on 30 August 2017. [416]
The practising certificate was issued pursuant to the Legal Profession Act 2007 (Qld). The certificate stated that Mr Smits was: [417] "authorised to engage in unsupervised legal practice as a Solicitor of the Supreme Court of Queensland from the seventh day of February 2017 to the thirtieth day of June 2017" and "The holder of this unrestricted principal certificate will be entitled to engage in legal practice on his own account either as a partner or director or sole practitioner of a law practice which is covered by professional indemnity insurance which complies with the Act. For further conditions see attached annexure."
The annexure to the practising certificate stated: "The practising certificate holder is entitled to engage in legal practice for a corporation mentioned in section 6 of the Legal Profession Regulation 2007 and for a pro bono project approved by the National Pro Bono Resource Centre … The holder of this practising certificate undertakes to: 1. Not be a trustee of any trust; 2. During the period of his bankruptcy, he will not accept appointment as trustee for any trust. 3. He will conduct legal practice only under his own name. 4. He will not operate a trust account."
The plaintiffs contend, and the defendants deny, that the reference to the entitlement to engage in legal practice for a corporation mentioned in section 6 of the Legal Profession Regulation 2007 and for a pro bono project approved by the National Pro Bono Resource Centre was a condition attached to Mr Smits' practising certificate that precluded him from acting as a solicitor for BAD Nominees. The defendants deny that this was a condition on Mr Smits' entitlement to practise. [418]
Mr Smits contends that, although he was not an "Australian legal practitioner" within the meaning of the Legal Profession Uniform Law during the period from 5 May 2016 to 7 February 2017 because did not hold a practising certificate, he was a "qualified entity" within the meaning of the Uniform Law. [419]

[41]

Mr Smits' retainer agreements

There is a dispute between the parties concerning the following four retainer agreements issued by Mr Smits in his capacity as a solicitor and signed by Mr Mahommed as attorney for BAD Nominees under the Power of Attorney: 1. retainer agreement bearing the date 14 September 2017 in relation to the 2014 proceedings; [420] 2. retainer agreement bearing the date 10 August 2018 in relation to the 2014 proceedings; [421] 3. retainer agreement bearing the date 17 August 2018 in relation to the 2018 proceedings; [422] and 4. retainer agreement bearing the date 27 September 2018 in relation to the 2014 proceedings. [423]
The issues in dispute are: 1. whether any of the above retainer agreements were provided to Mr Dean in his capacity as sole director of BAD Nominees prior to October 2018; [424] 2. whether the four retainer agreements were created on the dates they bear or whether they were all created from the same template at the same time in order to have something to produce in response to a notice to produce issued by the plaintiffs on 11 October 2018 in the 2014 proceedings; [425] 3. whether the retainer agreements were entered into (either on the date specified in the retainer agreements or in October 2018) in breach of the terms of the Power of Attorney and in breach of fiduciary duties owed by Messrs Smits and Mahommed to BAD Nominees because there was a conflict between the interests of BAD Nominees on the one hand and the interests of Messrs Smits and Mahommed and Vestecorp on the other hand and the retainer agreements were entered into with Mr Smits (who was an attorney) and for the benefit of the attorneys without the express authorisation of BAD Nominees; [426] 4. whether the use of the Power of Attorney to enter into the retainer agreements was a fraud on the power because it was done in furtherance of the Garslev conspiracy and/or because the Power of Attorney did not permit the use of the power to enter into a contract. [427]
The plaintiffs plead that, by reason of the breaches of fiduciary duty and fraud on the power referred to immediately above, the four retainer agreements are "void, avoided and rescinded". [428] The defendants deny that the retainer agreements are void, avoided and/or rescinded, relying on a litany of matters in support of that denial. [429] The extent to which those matters are relevant will depend upon findings and determinations in relation to other disputed matters, and I will return to the relevant matters relied on by the defendants in due course.

[42]

Invoices issued to BAD Nominees by Vestecorp and Mr Smits

The following table summarises the invoices created by Vestecorp and Mr Smits in respect of work that they claim to have done for which they claim to be entitled to payment for under the Power of Attorney and Consultancy Agreement and, in the case of Mr Smits, under the retainer agreements referred to above: [432] Date on invoice Issued by Amount charged Work described 19 Sept 2016 Vestecorp $60,172.00 Services under the Consultancy Agreement during the period from 5 May to 31 May 2016. 12 Dec 2017 Mr Smits (solicitor) $138,380.00 Preparation for and appearance at the hearing before Gleeson JA in the 2017 proceedings in October 2017, charged on the basis of 14 days' work at 12 hours per day and 4 days' travel plus disbursements. 30 March 2018 Mr Smits (solicitor) $133,509.00 Preparation for and appearance at the hearing before Brereton J in the 2017 proceedings in February 2018, charged on the basis of 12 days' work at 12 hours per day and 4 days' travel plus disbursements. 4 Sept 2018 Vestecorp $35,186.25 Services under the Consultancy Agreement during the period from 1 August 2018 to 31 August 2018. 19 Sept 2018 Mr Smits (consultant) $201,500.00 Services under the Consultancy Agreement during the period from 5 May to 31 May 2016, charged on the basis of 27 days at 12 hours per day plus travel, accommodation and meal expenses. 24 Sept 2018 Vestecorp $5,312.09 Services under the Consultancy Agreement during the period from 1 June 2016 to 30 June 2016. 24 Sept 2018 Vestecorp $38,165.42 Services under the Consultancy Agreement during the period from 1 December 2017 to 31 December 2017. 4 Oct 2018 Vestecorp $14,694.17 Services under the Consultancy Agreement during the period from 1 September 2018 to 30 September 2018. 5 Nov 2018 Vestecorp $50,719.17 Services under the Consultancy Agreement during the period from 1 October 2018 to 31 October 2018. Not referred to at 3FASOC, para 309. 3 Dec 2018 Mr Smits (solicitor) $176,545.05 Work relating to the 2014 proceedings during the period from 1 September 2018 to 2 November 2018, charged on the basis of 280 hours work plus disbursements. 7 Dec 2018 Vestecorp $32,262.08 Services under the Consultancy Agreement during the period from 1 November 2018 to 30 November 2018. 13 Dec 2018 Vestecorp $35,841.67 Services under the Consultancy Agreement during the period from 1 December 2018 to 12 December 2018 in connection with the hearing before Parker J. (The invoice is incorrectly dated 13 Dec 2016 but the entries in the invoices are dated Dec 2018) 15 Dec 2018 Mr Smits (solicitor) $71,250.00 Work relating to the 2014 proceedings and 2018 proceedings during the period from 1 November 2018 to 30 November 2018, including preparation and appearance at the hearing before Black J, charged on the basis of 125 hours work plus disbursements. 15 Dec 2018 Mr Smits (solicitor) $94,900.00 Costs of and incidental to appearance at the hearing before Parker J on 4, 5, 11 and 12 December 2018, charged on the basis of 14 days work at 12 hours per day plus disbursements. Total $1,264,736.90

[43]

The issues in dispute concerning these invoices and the work that Messrs Smits and Mahommed and Vestecorp claim to have done may be summarised as follows.
In relation to all of the invoices issued by Mr Smits and by Vestecorp, the plaintiffs plead that Messrs Smits and Mahommed and Vestecorp owed fiduciary duties to BAD Nominees and Mr Dean not to act in circumstances where there was a conflict between the interests of BAD Nominees and Mr Dean on the one hand and their own interests on the other hand. The plaintiffs allege that such a conflict existed when Messrs Smits and Mahommed approved payment of the invoices, in that they had an interest in the invoices being approved without scrutiny or deduction whereas BAD Nominees and Mr Dean had an interest in only paying fair, reasonable and proportionate fees that were recoverable pursuant to the 9 May 2016 documents. The plaintiffs allege that, by approving the invoices, Messrs Smits and Mahommed and Vestecorp acted for their own benefit and breached their fiduciary duty not to act in conflict. [433]
The plaintiffs also plead that Messrs Smits and Mahommed owed a fiduciary duty to BAD Nominees to act honestly in their dealings with BAD Nominees and to charge for work in a manner that would permit the costs to be understood and substantiated and assessed as being fair, reasonable and proportionate. In addition, the plaintiffs plead that the 9 May 2016 documents included terms to the effect that all fees charged would be fair, reasonable and proportionate to the circumstances, all fees could be substantiated and readily ascertained to be fair, reasonable and proportionate from any invoice, and invoices would be rendered in a form that permitted substantiation and assessment pursuant to the Uniform Law. The plaintiffs complain that the invoices issued by Mr Smits and Vestecorp are not presented in a manner that facilitates the costs being understood, substantiated and assessed. The plaintiffs allege that the provision of the invoices in that form, and the payment of those invoices (through the 20 March 2018 deed and the Garslev deeds) constituted a breach of those fiduciary and contractual duties because the charges were not fair, reasonable and proportionate, could not be substantiated, were not charged in accordance with s 172 of the Uniform Law and were not presented in invoices that permitted assessment pursuant to the Uniform Law. [434]

[44]

Claimed right of rescission of the 20 March 2018 deed due to alleged misrepresentation of fees owing

The plaintiffs claim that, if the fees owing by BAD Nominees to Mr Smits and Vestecorp are not $850,000 or more, then Garslev made a misrepresentation to BAD Nominees through Messrs Smits and Mahommed (acting as agents for Garslev) as to the amount of fees owing and BAD Nominees is therefore entitled to rescind, and does rescind, the 20 March 2018 Deed. [454]
The defendants deny that the alleged representation was made and deny that BAD Nominees was or is entitled to rescind the 20 March 2018 deed for alleged misrepresentation. [455]
The plaintiffs' contention that BAD Nominees rescinded the 20 March 2018 deed for material misrepresentation was not mentioned in the plaintiffs' submissions and is therefore taken to have been abandoned.

[45]

Money paid into court in these proceedings

It is common ground that Garslev re-sold the nine lots for an aggregate sale price of $1,126,000 and those sales had been completed by early April 2019. [456] Garslev pleads that it did so in order to "facilitate its intended borrowing to satisfy the consideration payable under [the 20 March 2018 deed]". [457] However, the Garslev deeds provided that Garslev's obligations under the 20 March 2018 deed were satisfied by Garslev taking an assignment from each of Mr Smits and Vestecorp of debts allegedly owing to them by BAD Nominees and promising to pay the amount of those alleged debts to Mr Smits and Vestecorp in the future out of the proceeds of Garslev's Yeppoon development. [458]
As referred to at [391]-[393] above, (save for $245,000) the net proceeds of sale of the nine lots has been paid into court pursuant to the orders made in these proceedings on 1 February 2019. [459] Garslev subsequently purported to allocate $50,000 of that amount to satisfy its undertaking referred to at [291] above to provide security for the liquidator's costs of the 2014 and 2018 proceedings. Although the plaintiffs maintain that Garslev was not entitled to use the funds paid into court under the 1 February 2019 in that manner, they do not assert an entitlement to $50,000 of the funds in court if their claims in these proceedings succeed. [460]

[46]

Defendants' challenge to the plaintiffs' standing and alleged abuse of process

As referred to at [396]-[414] above, the defendants/cross-claimants seek declarations to the effect that the plaintiffs lack standing to maintain these proceedings, that the proceedings are an abuse of process, and that the filing of the Third Further Amended Statement of Claim was an abuse of process and contravened Schedule 2 of the Legal Profession Uniform Law Application Act (NSW) 2014 and r 6.24, 13.1, 13.4 and 14.28 of the Uniform Civil Procedure Rules 2005 (NSW). [461]
The defendants/cross-claimants also contend that the plaintiffs/cross-defendants are liable to pay damages or equitable compensation for inducing their legal representatives to breach Schedule 2 of the Legal Profession Uniform Law Application Act (NSW) 2014. They seek an order for payment of such damages or equitable compensation. [462] The plaintiffs/cross-defendants deny any such liability. [463]

[47]

Plaintiffs' claims for relief in relation to the 9 May 2016 documents

The plaintiffs claim a declaration that each of the 9 May 2016 documents "has been rescinded". This claim is made on the basis of the plaintiffs' contentions that, by entering into the 9 May 2016 documents, Messrs Smits, Mahommed and Vestecorp breached fiduciary duties owed to Mr Dean and BAD Nominees during the May 2016 negotiations. [464]

[48]

Plaintiffs' claims for relief in relation to the 20 March 2018 deed and the Garslev deeds

The Third Further Amended Statement of Claim includes claims for declarations that the 20 March 2018 deed and the Garslev deeds are void. [465] Those claims were not mentioned in the plaintiffs' submissions, which focussed principally on rescission and equitable compensation.
The plaintiffs claim declarations that each of the 20 March 2018 deed and the Garslev deeds "has been rescinded". [466] In submissions, the plaintiffs acknowledged that the appropriate form of relief may be an order rescinding the deeds rather than a declaration that they have been rescinded. Those claims are made on three alternative bases: [467] 1. if the Power of Attorney is rescinded on the grounds referred to at [455] above, then the three deeds entered into by Mr Mahommed on behalf of BAD Nominees purporting to exercise his authority under the Power of Attorney must also be rescinded; 2. Messrs Smits and Mahommed acted in circumstances where their interests and the interests of BAD Nominees were in conflict, and acted for their own profit, in entering into the three deeds and nominating Garslev as the transferee of the nine lots, in breach of their fiduciary duties as attorneys; and 3. the nomination of Garslev as the transferee of the nine lots and the execution of the three deeds was a fraud on the Power of Attorney, irrespective of whether Messrs Smits and Mahommed owed fiduciary duties to BAD Nominees.
The plaintiffs claim that rescission is also available as against Garslev because: [468] 1. Garslev became chargeable with the nine lots and the other rights assigned to it under the 20 March 2018 deed because it had knowledge that the property was being assigned to it in breach of fiduciary duties owed by Messrs Smits and Mahommed to BAD Nominees (relying on the first limb of Barnes v Addy); 2. Garslev procured the three deeds, which it knew were entered into in breach of fiduciary duties owed by Messrs Smits and Mahommed to BAD Nominees or were a fraud on the power; and/or 3. Garslev and Mr J Smits were co-conspirators in the Garslev conspiracy, and knowingly assisted in breaches of fiduciary duty that were a dishonest and fraudulent design (relying on the second limb of Barnes v Addy).
If the three deeds are declared to have been rescinded or if an order for rescission is made on the grounds set out above, the plaintiffs claim that BAD Nominees and/or Overdean (as trustee of the Dean Super Fund) is entitled to the following relief as against Mr Smits, Mr Mahommed and Vestecorp (and also as against Mr J Smits and Garslev if they are found to be liable on the grounds referred to above): [469] 1. a declaration that the sum of $1,126,000 received by Garslev from the sale of the nine lots was held on trust for BAD Nominees; and/or 2. restitution or equitable compensation in the sum of $1,126,000, being the value of the nine lots as evidenced by the proceeds of their sale, together with interest from 30 March 2019 (being the date of completion of the sale of the last of the nine lots), compounded annually.

[49]

Plaintiffs' other claims for relief in relation to the sale proceeds of the nine lots

For completeness, I note the following additional claims for relief pleaded by the plaintiffs that are taken to have been abandoned because they were not mentioned in the plaintiffs' submissions: 1. claim for damages against Mr Smits, Mr Mahommed and Vestecorp for breach of contract in the sum of $1,126,000 (being the value of the nine lots, as evidenced by the sale proceeds realised in January 2019) plus interest from 30 March 2019; [474] and 2. claim for damages in tort against all defendants in respect of the alleged Garslev conspiracy in the sum of $1,126,000. [475]

[50]

Plaintiffs' claims for relief in relation to fees

The plaintiffs further plead that, if the 20 March 2018 deed is rescinded, BAD Nominees is entitled to restitutio in integrum which requires payment to it of $1,126,000 in fees and other charges that Garslev purported to pay by deducting them from the $850,000 consideration specified in the 20 March 2018 deed. The plaintiffs contend that judgment for $1,126,000 should therefore be entered against Garslev. [476]
The plaintiffs also put their claims for relief in relation to fees on three alternative bases.
First, the plaintiffs claim a declaration that all retainers between BAD Nominees and Mr Smits for the provision of legal services, including the written retainers dated 14 September 2017, 10 August 2018, 17 August 2018 and 27 September 2018 and any oral retainer are void or, alternatively, "have been rescinded". [477] The claim that Mr Smits' retainers are void and of no effect is put on the basis that the 9 May 2016 documents are rescinded. The alternative claim for rescission is put on the basis that Messrs Smits and Mahommed entered into the retainers in breach of their fiduciary duties as attorneys or committed a fraud on the power by entering into the retainers. [478]
Second, the plaintiffs also contend that the charging of the fees by Mr Smits and Vestecorp was a breach of fiduciary duty by Mr Smits (as attorney and as solicitor) and Mr Mahommed (as attorney and the principal of Vestecorp who caused Vestecorp to charge the fees) or a fraud on the power, and that "the invoices for fees, and payment thereof, ought to be set aside" on those grounds. [479]
Third, the plaintiffs also seek judgment or restitution pursuant to s 10 of the Uniform Law against Mr Smits, Mr Mahommed and Vestecorp in the sum of $1,126,000. [480]
That relief is sought on the basis that Mr Smits and Vestecorp provided legal services to BAD Nominees in circumstances where they were not qualified entities, in breach of s 10 of the Uniform Law, and Mr Mahommed procured that breach by Vestecorp. [481]
Section 10 of the Uniform Law plainly does not apply to work done and fees charged by Mr Smits in the period after he was re-admitted to practice in February 2017. The plaintiffs' submissions nevertheless asserted that Mr Smits and Vestecorp "ought to repay, as a debt, the money paid for their fees. There is no reason why the entire value of the Beechworth Land ought not be treated as a payment for their fees recoverable under section 10." [482]

[51]

Plaintiffs' claims for interest and costs

The plaintiffs also claim interest, compounding interest on the basis that the defendants are defaulting fiduciaries, costs and interest on costs. [484]

[52]

Defendants/cross-claimants' claim for $769,397

As referred to at [446] above, the defendants/cross-claimants claim an order under s 197 of the Corporations Act requiring the plaintiffs to pay to them a total amount of $769,397.20, being the amounts invoiced to BAD Nominees by Mr Smits and Vestecorp plus certain other amounts they claim to have paid in respect of alleged debts of the Dean Super Fund, less the $850,000 sum specified as the consideration for the assignments in the 20 March 2018 deed. [485] The plaintiffs/cross-defendants resist that claim on the grounds summarised at [447] above. [486]

[53]

Defendants'/cross-claimants' claim against Mr Dean for damages for alleged procurement of breaches of alleged contractual obligations of BAD Nominees

The defendants/cross-claimants claim damages or equitable compensation against Mr Dean for his alleged procurement of breaches by BAD Nominees of its obligations under the Consultancy Agreement, the 20 March 2018 deed and the Garslev deeds and alleged implied obligations to co-operate in the performance of each such agreement and deed, alleged implied obligations "of facilitation" and alleged implied obligations of "good faith". They claim that Mr Dean breached those obligations by, inter alia, asserting that BAD Nominees had assigned its rights under the February 2013 security to MAFA, by taking steps in the 2014 proceedings and 2017 proceedings "to thwart or undermine performance of those Agreements and Deeds by [BAD Nominees]" and by filing and maintaining claims for relief in the 2019 proceedings. [487]
The losses that the defendants/cross-claimants claim to have suffered are: [488] 1. non-payment of the invoices issued by Mr Smits and Vestecorp, and various other amounts included in the claim for the net amount of $769,397.20 referred to at [473] above, as and when due; 2. delays allegedly suffered by Garslev in the re-sale of the nine lots, resulting in Garslev having to "stop and de-mobilise its civil contracting business and development project in Yeppoon" and consequently incurring various liabilities to third party contractors and consultants; and 3. the costs of Garslev having to borrow to fund its working capital requirements as a result of the sale proceeds of the nine lots being paid into court in these proceedings.
The plaintiffs/cross-defendants deny that Mr Dean induced the alleged breaches of contract and deny any liability to pay damages or equitable compensation to the defendants/cross-claimants. [489]

[54]

Claims for damages under s 68 of the Supreme Court Act by the defendants/cross-claimants

The defendants/cross-claimants also claim damages under s 68 of the Supreme Court Act. The basis of this claim is not articulated in the Cross‑Claim. [490] The plaintiffs deny liability to pay any such damages. [491]

[55]

Defendants/cross-claimants' claim for interest and costs

The defendants/cross-claimants claim pre-judgment interests and costs. [492]

[56]

Defendants' challenges to the plaintiffs' standing

It is convenient to address at the outset the defendants' contentions that the plaintiffs lack standing to maintain these proceedings: see [396]-[414] and [453]-[454] above.
I reject the defendants' first contention set out at [398] above for two reasons. First, as referred to at [151] above, the defendants have adopted inconsistent positions concerning the MAFA deed within these proceedings. Second, and more importantly, the MAFA deed is not relevant to the plaintiffs' claims for relief in these proceedings. The defendants submitted that, by reason of the MAFA deed, "[a]ll that Nominees was really left with as at 20 MAR 18 … was a speculative chose in action against MAFA for breach of the [MAFA Deed]". [493] Irrespective of the position as between BAD Nominees and MAFA, BAD Nominees (or its nominee) was entitled to the transfer of the nine lots under the 2 August 2017 contract between BAD Nominees and BLE: see [158]-[163], [179] and [190]-[191] above. Contrary to the defendants' submissions, [494] these proceedings concern whether BAD Nominees was deprived of the benefit of the 2 August 2017 contract by Messrs Smits and Mahommed using the Power of Attorney to cause the nine lots to be transferred to Garslev in breach of their fiduciary duties and whether Garslev received the nine lots with knowledge that they represented the proceeds of the fiduciaries' breaches of duty, procured those alleged breaches of duty or fraud on the power, or knowingly assisted in the allegedly dishonest and fraudulent design. The plaintiffs have standing to have those claims determined.
I reject the defendants' second contention set out at [399] above. The consideration for the transfer of the nine lots under the 2 August 2017 contract was a $1,000,000 reduction in BAD Nominees' claim against BLE. I assume that the defendants' contention is that this consideration was illusory because BLE was not in truth indebted to BAD Nominees as at 2 August 2017. I infer that the administrators satisfied themselves before entering into the 2 August 2017 contract that monies were in fact owing by BLE to BAD Nominees. In these proceedings, the defendants have repeatedly and vigorously asserted that no such monies were owing to BAD Nominees. However, as explained at [547]-[550] below, the defendants have adduced no evidence capable of supporting that assertion. The administrators and liquidator of BLE performed the 2 August 2017 contract by transferring the nine lots to Garslev on the basis of the nomination made by Mr Mahommed on behalf of BAD Nominees. Even if the defendants had established that there was no debt owing by BLE to BAD Nominees, this would have had no bearing on the issues to be determined between the plaintiffs and the defendants in these proceedings as summarised at [480] above.

[57]

Res judicata, issue estoppel and Anshun estoppel

I now turn to the defendants' contentions that the plaintiffs are precluded from maintaining their claims in these proceedings by the doctrine of res judicata, issue estoppel or Anshun estoppel: see [407]-[408] and [453]-[454] above.

[58]

Applicable principles

Although the defendants strenuously asserted that the doctrines of res judicata, issue estoppel or Anshun estoppel applied, their submissions were not informed by of the principles applicable to each of these doctrines. The plaintiffs' submissions scarcely bothered to respond to the defendants' reliance on these doctrines.
Where the existence of a right has been determined by a final judgment or order of a court, that right ceases to exist independently of the judgment and "merges" in that judgment or order. The successful plaintiff in the proceeding in which the final judgment or order was made cannot subsequently bring an action upon the right that has been extinguished upon merger in the judgment or order. The successful plaintiff's only right is a right of a higher nature to enforce the judgment or order. This is res judicata in the strict sense: Clayton v Bant (2020) 95 ALJR 34; [2020] HCA 44 (Clayton) at [26] (Kiefel CJ, Bell and Gageler JJ) and [66] (Edelman J); Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28 (Tomlinson) at [20] (French CJ, Bell, Gageler and Keane JJ).
However, if the right adjudicated upon is determined not to exist, there is nothing to merge into the final judgment or order. In those circumstances, cause of action estoppel, also referred to as "claim estoppel", will preclude the subsequent assertion by the unsuccessful plaintiff of any right finally determined in the earlier judgment not to exist: Clayton at [29] (Kiefel CJ, Bell and Gageler JJ), [50]-[51] (Gordon J) and [67], [71] (Edelman J); Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 40 NSWLR 543 at 556E-557G (Clarke JA, Priestley JA agreeing) and the authorities there cited; see also K R Handley, Spencer Bower and Handley: Res Judicata (5th ed, LexisNexis Butterworths, 2019) at [1.04]-[1.06].
In the context of cause of action estoppel, the expression "cause of action" means title to the legal right established or claimed: Clayton at [28] (Kiefel CJ, Bell and Gageler JJ).
For the purpose of cause of action estoppel, it is not necessary that the cause of action or right asserted is identical with a right adjudicated upon in an earlier final judgment or order. It is sufficient if, considered as a matter of substance rather than form, the rights are "of a substantially equivalent nature and cover substantially the same subject matter": Clayton at [33]-[34] (Kiefel CJ, Bell and Gageler JJ).

[59]

Judgments and orders of Gleeson JA and Brereton J in the 2017 proceedings

I refer to the analysis at [179] to [195] and [199] to [216] above of the claims for relief in the 2017 proceedings, the manner in which those proceedings were conducted and the judgments and orders of Gleeson JA and Brereton J. No legal right relied on by the plaintiffs in support of their claims for relief in the present proceedings was determined to exist, or determined not to exist, in the judgments and orders of Gleeson JA and Brereton J in the 2017 proceedings. The order made by Brereton J dismissing the interlocutory process filed by Mr Cohen on 29 September 2017 purportedly for BAD Nominees (on instructions from Mr Dean) reflected the rejection of the Dean interests' contentions that the Power of Attorney had been validly revoked on 31 May 2016 and that Mr Dean retained the authority to instruct solicitors on behalf of BAD Nominees in the 2017 proceedings, together with the Dean interests' abandonment of their claims for a declaration that the Power of Attorney and IAD were not valid or binding on BAD Nominees and an order terminating the Power of Attorney under s 28 of the Powers of Attorney Act. There was no final determination of whether the Power of Attorney and IAD were valid and binding on BAD Nominees, as opposed to whether it had been validly revoked. It follows that the doctrines of res judicata and cause of action estoppel do not operate to preclude the plaintiffs from maintaining their claims for relief in these proceedings by reason of the judgments and orders in the 2017 proceedings.
In my opinion, save in one limited respect to which I refer at [503]-[504] below, the judgments and orders in the 2017 proceedings did not necessarily resolve any ultimate issue of fact or law that the plaintiffs put in issue in the present proceedings. It follows that the doctrine of issue estoppel does not preclude the plaintiffs from maintaining their claims for relief in these proceedings, save in the limited respect that I will identify.
In their pleadings [495] and submissions, the defendants contended that the 2017 proceedings necessarily resolved the following issues: 1. the "validity, currency and operability" and irrevocability of the Power of Attorney until 6 May 2019; 2. that the Power of Attorney was given for valuable consideration; 3. that the Power of Attorney was coupled with a grant because Messrs Smits and Mahommed had an interest in BAD Nominees' success through 25 per cent of recoveries that had been assigned to them; 4. that the purpose of the grant of the Power of Attorney was to give Messrs Mahommed and Smits full power and authority to deal with the subject matter; 5. those powers were not subject to any relevant condition or limitation; 6. the full power and authority conferred on Messrs Mahommed and Smits extended to retaining Smits as a solicitor, the conduct of the 2014 proceedings, all actions taken under or pursuant to and in respect of the 2 August 2017 contract, any arrangements or contracts made in respect of the nine lots and full authority and power to deal with any remaining debt owed by BLE to BAD Nominees and the proceeds of sale of the nine lots; 7. whether the contract made on 2 August 2017 was enforceable and whether that contract was or would be in the best interests of BAD Nominees, and whether parties were empowered or obliged to perform the contract for BAD Nominees; 8. whether Mr Dean, or Mr Smits and Mr Mahommed as attorneys, had "the paramount power" to engage solicitors to conduct the proceedings for BAD Nominees; and 9. whether Mr Smits and Mr Mahommed, as attorneys, could give effect to the "Vestecorp Proposal".

[60]

Judgment and orders of Black J in the 2014 proceedings

I refer to the detailed analysis at [279]-[306] above concerning the claims for relief included in the interlocutory process determined by Black J on 9 November 2018, the evidence adduced by the parties in relation to those claims, his Honour's reasons for judgment and the declaration made.
Overdean's claims for relief in these proceedings are predicated on his Honour's determination that it was validly appointed as the trustee of the Dean Super Fund on 5 September 2018. However, that does not involve bringing on action on the same right determined by the declaration made on 9 November 2018. The doctrine of res judicata does not apply.
Black J declined to make any determination concerning rights in respect of property of the Dean Super Fund or the transactions between BLE, BAD Nominees and Garslev affecting such rights. His Honour's judgment does not give rise to any cause of action estoppel or issue estoppel precluding the plaintiffs from maintaining any of their claims in these proceedings.
Nor does the doctrine of Anshun estoppel apply. In these proceedings, the plaintiffs do not make any of the claims that they abandoned at the hearing before Black J. [519] The issues now raised for determination in these proceedings concerning the three deeds that Messrs Smits and Mahommed caused BAD Nominees to enter into with Garslev that resulted in the nine lots being transferred to Garslev were relevant to Overdean's claim for a vesting order under s 71 of the Trustee Act. Black J recognised the existence and general nature of these issues in declining to make the vesting order, but did not determine those issues. [520] However, it was not unreasonable for the plaintiffs not to raise the claims now made in these proceedings for determination within the interlocutory process heard by Black J on 1 November 2018.
The evidence referred to at [284]-[303] above shows that Mr Dean and Overdean first became aware at some time between 5 October and 11 October 2018 that Messrs Smits and Mahommed had caused the nine lots to be transferred to Garslev. Their solicitors promptly issued a notice to produce documents that would have enabled them to investigate the circumstances in which, and the terms on which, this had occurred. There is no evidence of the timing or substance of any response to this notice. The evidence of Messrs Smits and Mahommed is that the 20 March 2018 deed was first disclosed to Mr Dean in Mr Mahommed's affidavit of 26 October 2018. [521] Assuming that Mr Dean or his legal representatives digested the entire contents of that affidavit and the documents exhibited to it immediately, that was only two full business days prior to the hearing before Black J. They could not reasonably have formulated the claims now made in these proceedings and taken the necessary steps to join Garslev to the 2014 proceedings so as to have those claims heard and determined by Black J. Even if they had endeavoured to do so, the defendants (including Garslev) would have been unable to respond to those claims in time for the hearing.

[61]

Judgment and orders of Parker J in the 2014 proceedings and 2018 proceedings

I refer to the analysis at [368]-[383] above of the priority disputes which were the subject of the hearing before Parker J on 4-5 and 11-12 December 2018 and his Honour's reasons for judgment published on 30 August 2019 and subsequent declarations. As that description makes plain, no right claimed by the plaintiffs in these proceedings merged in the declarations made by Parker J or was determined by his Honour not to exist. Nor did his Honour's judgment and declarations necessarily determine any matter of fact or law in issue in the current proceedings. His Honour expressly recorded that it was not necessary for him to resolve the issues in dispute between Mr Dean, Overdean and MAFA on the one hand and BAD Nominees (then represented by Messrs Smits and Mahommed) on the other hand.
Mr Dean's discovery that the nine lots had been transferred to Garslev was still very recent. If an application had been made to introduce into the hearing before Parker J allegations of the kind now made in these proceedings (including by joining Garslev to those proceedings), that would have significantly delayed the hearing and determination of the priority dispute as between the former administrators of BLE and all secured creditors. The administration had concluded on 21 February 2018, the Court had made orders determining the amount of the administrators' remuneration [522] and they were seeking payment. The dispute between Mr Dean and Overdean and Messrs Smits and Mahommed concerning BAD Nominees and Garslev had nothing to do with the administrators. In my opinion, it was not unreasonable for the plaintiffs to prosecute their claims by commencing and filing pleadings in separate proceedings, rather than endeavouring to include them in the interlocutory processes for determination before Parker J in the administration proceedings. Indeed, the latter course would have been contrary to s 56 of the Civil Procedure Act 2005 (NSW) in all the circumstances.
For those reasons, I reject the defendants' contentions that the doctrines of res judicata, cause of action estoppel, issue estoppel or Anshun estoppel preclude the plaintiffs from maintaining their claims in these proceedings by reason of the judgment and declarations of Parker J.

[62]

Defendants' other estoppel contentions

I now turn to the defendants' remaining estoppel contentions referred to at [398], [404], [409] and [410] above.

[63]

No estoppel by reason of the MAFA deed and no MAFA conspiracy

The defendants do not identify the species of estoppel on which they rely as precluding the plaintiffs from departing from their contention in earlier proceedings that BAD Nominees' rights under the February 2013 security had been assigned to MAFA under the MAFA deed. The defendants' submissions failed to articulate any claim that they relied on the plaintiffs' position in those earlier proceedings to their detriment. On the contrary, the defendants contended in those earlier proceedings that the MAFA deed had been abandoned or repudiated and they read evidence to that effect in these proceedings: see [151] and [379] above. The defendants have not established the estoppel referred to at [398]. The MAFA deed is irrelevant to the issues to be determined in these proceedings in any event, for the reasons explained at [480] above.
It is convenient at this point to address the defendants' MAFA conspiracy allegation referred to at [152] and [160]. I reject that allegation for three reasons.
First, it is a serious allegation that was not put Mr Dean in cross-examination.
Second, the defendants allege that the MAFA conspiracy was a conspiracy between Mr Dean and others to injure Messrs Smits and Mahommed and Vestecorp by unlawful means. An unlawful means conspiracy is not actionable unless the agreement is carried out and results in loss or damage to the person at whom it was aimed: see Talako v Talako [2021] HCA 15 at [25]. Both parties have adopted inconsistent positions about the MAFA deed, but the defendants themselves have adduced the evidence referred to at [151] above to the effect that the MAFA deed was not carried into effect. In any event, there is no evidence that the MAFA deed resulted in any loss or damage to Messrs Smits and Mahommed having regard to the events that subsequently occurred.
Third, the others who allegedly conspired with Mr Dean (Messrs Huxley, Batiste and Orlizki) are not parties to those proceedings.

[64]

No estoppel by reason of appointment of Overdean as trustee of the Dean Super Fund

The defendants have also failed to establish the estoppel referred to at [404] above. The plaintiffs' position during the hearings before Black J and Parker J was that Overdean, as the newly appointed trustee of the Dean Super Fund had the right to pursue the claims of the trustee as a secured creditor of BLE. That is not inconsistent with any position adopted by the plaintiffs in these proceedings.

[65]

No estoppel arising from plaintiffs' previous conduct

The defendants have also failed to establish the estoppel referred to at [409] above. The evidence referred to at [284] to [290], [297] to [305] and [385] to [386] above demonstrates that the plaintiffs were not aware that the nine lots had been transferred to Garslev until this was revealed by the liquidator of BLE during the course of the proceedings before Black J in October 2018. Indeed, Messrs Smits and Mahommed have given efforts that they kept the arrangements with Garslev under the 20 March 2018 deed secret from Mr Dean [523] . From October 2018, the plaintiffs sought to ascertain precisely what had occurred with the nine lots, lodged caveats to protect their claimed interest and then promptly commenced the present proceedings on 13 December 2018. The plaintiffs did not acquiesce in the disposition of the nine lots to Garslev.

[66]

Plaintiffs not estopped from maintaining their claims in these proceedings by reason of alleged conspiracy between Mr Dean and advisers

As referred to at [410] above, the defendants plead that the plaintiffs are estopped from relying on or maintaining their claims in these proceedings by reason of the alleged conspiracy between Mr Dean and his advisers to obtain financial advantages from Messrs Smits and Mahommed by inducing them to enter into the Power of Attorney, Consultancy Agreement and IAD. I have summarised these allegations at [112]-[114]. I reject the allegations for four reasons.
First, Mr Dean was cross-examined over two full days. It was not put to him that he conspired with Mr Conlon and Mr Armstrong in the manner referred to at [113] and [114]. That alone is sufficient reason to reject the allegations as a matter of procedural fairness.
Second, the defendants failed to establish the existence as at 9 May 2016 of each of the matters set out at [112] above that they allege Mr Dean failed to disclose to them before the Power of Attorney, Consultancy Agreement and IAD were signed.
The defendants allege that Mr Dean failed to disclose that there was no remaining debt owed to BAD Nominees and secured by the February 2013 security as at 9 May 2016.
That allegation incorporates three distinct contentions: 1. under the February 2013 security, BAD Nominees had an interest in BLE's registered mortgage in respect of only 23 lots of the Beechworth land, and Mr Dean had released and received payment in respect of 26 lots prior to the appointment of administrators to BLE; [524] 2. that, by a combination of payments received from BLE prior to the appointment of the administrators and payments received from third parties after the appointment of the administrators, BAD Nominees had received more than the amount owing to it by BLE; [525] and 3. Mr Dean, on behalf of BAD Nominees, had consented to the administrators selling 26 lots of the Beechworth land and these sales had extinguished BAD Nominees' security interest insofar as it related to those 28 lots pursuant to s 442C of the Corporations Act. [526]
The defendants failed to prove the first contention. It will be recalled that the Beechworth land was the subject of a development. The defendants did not adduce any evidence to establish the stage of the development and progress of any subdivision at the times when the 26 lots were released. The Court will not speculate about the interrelationship or correlation between the 26 lots released and the 23 lots that Mr Dean identified as being the subject of the February 2013 security. However, I infer from the BLE administrators' willingness to make the in specie distribution under the 2 August 2017 contract that the administrators held the view that BAD Nominees had a security interest in at least the 9 lots the subject of that contract.

[67]

Defendants' contention that these proceedings are an abuse of process

To the extent that the defendants' contentions that the proceedings are an abuse of process depend on their allegations that the plaintiffs lack standing or are precluded from maintaining their claims in these proceedings by reason of the various estoppels referred to at [536]-[558] above, I reject the defendants' contentions for all the reasons explained above.
I have assumed that the defendants' pleading that these proceedings are an attempt by the plaintiffs "to attach to the fruits of the respective efforts of [Mr Smits and Mr Mahommed as attorneys] and [Mr Smits and Vestecorp as consultants] and Garslev" in furtherance of alleged "illegal matters" and to avoid judicial scrutiny of those matters [532] amounts to a contention that, by commencing and maintaining these proceedings, the plaintiffs have invoked the court's procedures for an illegitimate purpose.
That contention appears to rely on the first kind of abuse of process referred to by McHugh J in Rogers v The Queen (1994) 181 CLR 251 at 286, in a passage subsequently cited with approval by Gleeson CJ, Gummow, Hayne and Crennan JJ in Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27 at [15]: "Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute."
More recently, Kiefel CJ, Bell and Keane JJ said in UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45 at [1] (citations omitted): "[1] … The varied circumstances in which the use of the court's processes will amount to an abuse, notwithstanding that the use is consistent with the literal application of its rules, do not lend themselves to exhaustive statement. Either of two conditions enlivens the power: where the use of the court's procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute. …"
The onus of satisfying the Court that there is an abuse of process lies upon the defendants as the party asserting the abuse of process, and the onus is "a heavy one": Williams v Spautz (1992) 174 CLR 509 (Williams) at 529 (Mason CJ, Dawson, Toohey and McHugh JJ).

[68]

Terms of the Power of Attorney, Consultancy Agreement and IAD and fiduciary duties of attorneys

I now turn to the parties' competing contentions referred to at [70]-[94] and [115]-[118] above in relation to the express and implied terms of the Power of Attorney, Consultancy Agreement and IAD and whether Messrs Smits and Mahommed and Vestecorp owed fiduciary duties to Mr Dean and BAD Nominees upon execution of those documents
In view of my determinations concerning issue estoppel at [504] above, it is not necessary to address the issue referred to at [95] above concerning the scope of the recoveries in respect of which clause 1 of the IAD conferred a 25 per cent entitlement to Messrs Smits and Mahommed. In view of my determinations concerning Anshun estoppel at [524] above, it is not necessary to address the issues referred to at [63]-[69] and [99]-[111] above concerning whether Messrs Smits and Mahommed and Vestecorp owed fiduciary duties to Mr Dean and BAD Nominees during the negotiations leading to the execution of the 9 May 2016 documents and whether the execution of those documents per se constituted or involved a breach of any such fiduciary duty. The plaintiff's claims for relief referred to at [455] and [457(1)] above cannot succeed.
The Power of Attorney was in the form prescribed by Schedule 2 of the Powers of Attorney Regulation 2011 (NSW) and is therefore a "prescribed power of attorney" within the meaning of s 8 of the Powers of Attorney Act 2003 (NSW). The exercise of determining the powers and obligations imposed on Messrs Smits and Mahommed by the Power of Attorney and whether the Power of Attorney included the implied terms for which the plaintiffs contend must be undertaken having regard to the terms of the instrument, the circumstances in which it was entered into (including the execution of the Consultancy Agreement and the IAD at the same time) and the provisions of Part 2 of the Powers of Attorney Act governing prescribed powers of attorney.
The defendants' submissions emphasise the provisions of clause 2 of the Power of Attorney, which I have referred to above but it is convenient to set out in full here: "My attorney/s may exercise the authority conferred on my attorney/s by Part 2 of the Powers of Attorney Act 2003 to do anything on my behalf I may lawfully authorise an attorney to do. Additional powers (optional) [none of the additional powers are selected] THE ATTORNEYS SHALL BE APPOINTED IRREVOCABLY FOR THREE (3) YEARS AS 'AUTHORISED REPRESENTATIVES' AND AGENTS OF THE PRINCIPAL TO ACT AND TO EXERCISE ALL POWERS, RIGHTS AND PRIVILEGES OF OR IMPUTABLE TO OR EXERCISABLE BY THE PRINCIPAL IN RELATION TO AND IN RESPECT OF THE MATTERS REFERRED TO IN PAGE 5: CONTINUATION AS TO 'SECTION 2. POWERS.'"

[69]

The alleged Garslev conspiracy, breaches of fiduciary duty and fraud on the power

[70]

Introductory observations

The plaintiffs' written and oral submissions did not mention the alleged Attorney conspiracy referred to at [53]-[59], [164] and [442(7)(a)] above or the alleged Vestecorp conspiracy referred to at [164]-[167] above. The plaintiffs' submissions were directed solely to the alleged Garslev conspiracy. It is therefore not necessary to give separate consideration to the Attorney conspiracy and Vestecorp conspiracy allegations pleaded by the plaintiffs.
As I have already mentioned at [463(2)] above, the plaintiffs' claim for damages in tort against all defendants in respect of the alleged Garslev conspiracy was not pressed at final hearing. The plaintiffs' relied on the alleged Garslev conspiracy not as a cause of action in tort but as evidencing a dishonest and fraudulent design.
I note, however, that the plaintiffs' allegations that the alleged breaches of fiduciary duty by Messrs Smits and Mahommed amounted to a dishonest and fraudulent design were not limited to the Garslev conspiracy: see [249]-[250] and [357]-[360] above.
The terms in which some of the plaintiffs' allegations are pleaded are capable of being understood as contentions that the 20 March 2018 deed and the Garslev deeds were entered into without authority (as opposed to in breach of the attorneys' fiduciary duties or by a fraud on the power). [541] A case of want of authority, if established, would have raised different questions about the nature of relief available to the plaintiffs, compared to the case that the plaintiffs pleaded and ran at final hearing: see Great Investments Ltd v Warner (2016) 243 FCR 516; [2016] FCAFC 85.
The elements of their pleaded case that the plaintiffs ran were that the 20 March 2018 deed and the Garslev deeds should be rescinded because they had been entered into in breach of fiduciary duties owed by Messrs Smits and Mahommed to BAD Nominees, and Garslev and Mr J Smits had induced or procured those breaches, were knowing assistants in those breaches or were knowing recipients of property obtained by those breaches. [542] The plaintiffs relied on the doctrine of fraud on the power as an alternative basis for rescission of the deeds only if Messrs Smits and Mahommed were found not to have owed fiduciary duties to BAD Nominees or not to have breached those duties by using the Power of Attorney to cause BAD Nominees to enter into the 20 March 2018 deed and the Garslev deeds. The plaintiffs' submissions did not distinguish between the relief that they claimed was available to them in this alternative scenario compared to the scenario in which breaches of fiduciary duty and procurement, knowing assistance or knowing receipt were established.

[71]

Breaches of fiduciary duty by Messrs Smits and Mahommed in entering in to the 20 March 2018 deed

I have referred to the terms of the 20 March 2018 deed in detail at [231]-[241] above. The deed was drafted by Mr Smits. [543] Mr Mahommed signed it on behalf of BAD Nominees, purportedly in his capacity as attorney appointed under the Power of Attorney. [544] Mr Smits approved of Mr Mahommed's exercise of the Power of Attorney to enter into the deed. [545]
It will be recalled that, under the 2 August 2017 contract, BAD Nominees (or its nominee) was entitled to receive a transfer of the nine lots from BLE (as mortgagee in possession) in consideration for a reduction of $1,000,000 in the amount of BAD Nominees' claim as a creditor of BLE. [546]
Pursuant to the 20 March 2018 deed, BAD Nominees undertook to nominate Garslev as the transferee of the nine lots and assigned to Garslev all of BAD Nominees' right, title and interest to and in respect of: [547] 1. the 2 August 2017 contract and the orders made in the 2017 proceedings on 23 October 2017 in respect that contract; 2. the February 2013 loan and the February 2013 security; and 3. all debts, claims and rights of action of BAD Nominees against Mr Dean, Mr Conlon or any other lawyers or tax accountants of BAD Nominees.
In return, Garslev agreed "to pay or to guarantee in aggregate payment of the said sum of $850,000 to the Assignor [BAD Nominees], to its use or benefit and/or to such recipients as are or may be authorised or directed by the Assignor herein or otherwise or by any attorney, representative, agent or officer of the Assignor and subject to these terms and conditions." [548]
The stated consideration of $850,000 is less that the current market appraisal for the nine lots alone of $923,000, as referred to in the Recitals to the 20 March 2018 deed. Messrs Smits and Mahommed considered that BAD Nominees' rights under the February 2013 loan and security had value as at March 2018, as I will refer to below.
The 20 March 2018 deed did not entitle BAD Nominees to receive a payment of $850,000 for the rights to the nine lots and the other rights. The deed assigned those rights to Garslev in consideration for a mere promise or guarantee to pay that sum. Pursuant to clause 1, any such payment was not required to be made to BAD Nominees but could be made to any recipient directed by Messrs Smits and Mahommed as attorneys of BAD Nominees. Pursuant to clauses 2 and 3 of the deed referred to at [234]-[236] above, Garslev was entitled to "pay" the $850,000 by paying, settling or indemnifying BAD Nominees in respect of: 1. alleged debts and liabilities of BAD Nominees, including: 1. GST allegedly payable in respect of the nine lots in the amount of $185,000; 2. any stamp duty payable in respect of the transfer of the nine lots; 3. amounts allegedly payable by BAD Nominees under the deeds of assignment of debts executed in May 2016; and 4. amounts allegedly payable by BAD Nominees to Messrs Smits and Mahommed and Vestecorp (referred to as the "Attorneys", "Consultants" and "Lawyers"); and 1. liabilities that had not been incurred by BAD Nominees as at the date of the deed, including amounts that may be payable in the future to the "Attorneys", "Consultants" and "Lawyers".

[72]

BAD Nominees' alleged lack of funds to complete the contract

Mr Smits gave evidence that it was in the interests of BAD Nominees to enter into the 20 March 2018 deed in order to ensure that the 2 August 2017 contract was capable of being performed because it was apparent as at March 2018 that BAD Nominees would not be able to perform that contract. According to Mr Smits, Mr Mahommed therefore "decided it would be necessary to canvas interested parties to acquire the lots to enable [BAD Nominees] to complete the contract because it couldn't do so, it had no financial resources to do it itself." [551]
Mr Smits gave evidence that BAD Nominees lacked the financial resources to complete the 2 August 2017 contract because it did not have the funds to pay stamp duty on the transfer of the nine lots [552] and "couldn't even pay the conveyancers". [553]
There is no dispute that the transferee of the nine lots would have been required to pay stamp duty on the lots. Mr Smits gave evidence that no inquiries were made of Mr Dean prior to 20 March 2018 to ascertain whether BAD Nominees had or could raise the funds required to pay stamp duty on the nine lots. [554] Indeed, there was no correspondence at all between Messrs Smits and Mahommed and Mr Dean prior to 20 March 2018 in relation to the transfer of the nine lots. [555] That demonstrates that the statement in Recital B to the 20 March 2018 deed that BAD Nominees had not answered several written requests for (inter alia) moneys to pay stamp duty, [556] was false. Mr Smits' refusal in cross-examination to accept that Recital B was false reflects very poorly on his credit. [557]
There is no evidence that BAD Nominees could not raise the funds to pay the stamp duty on the nine lots or to pay conveyancing costs. This was not put to Mr Dean in cross-examination. Mr Dean had in fact engaged conveyancers to act on the transfer of the nine lots to BAD Nominees. [558] Mr Smits asserted that Mr Dean did not pay those conveyancers, [559] but that is not surprising in circumstances where the lots were later transferred to Garslev rather than to BAD Nominees. It appears that the sole basis on which Messrs Smits and Mahommed asserted that BAD Nominees was unable to pay the costs was that BAD Nominees had not paid any moneys to them for the fees that they claim to be owed. [560] However, it is unremarkable that Mr Dean had not paid or caused BAD Nominees to pay any fees to Messrs Smits and Mahommed or Vestecorp as at 20 March 2018 in circumstances where the defendants admit that they had not yet issued any invoices. [561]

[73]

Lack of cooperation from and trust in Mr Dean

Mr Smits' evidence that the nine lots could not be transferred to BAD Nominees because he and Mr Mahommed could not elicit cooperation from Mr Dean or his legal advisers [563] is falsified by his evidence that there was no correspondence between Messrs Smits and Mahommed and Mr Dean discussing any aspect of the transfer of the nine lots prior to 20 March 2018. [564]
Messrs Smits and Mahommed's claimed apprehension that Mr Dean was trying to "defraud" them appears to be a reference to the fact that he had not yet paid any fees to them, the alleged MAFA conspiracy referred to at [150]-[151] above and/or the further alleged conspiracy between Mr Dean and his advisers referred to at [309] above. [565] I have rejected the MAFA conspiracy and the other alleged conspiracy at [538]-[540] and [544]-[558] above.
The fact that no fees had been paid as at 20 March 2018 does not support an inference that Mr Dean was trying to "defraud" Messrs Smits and Mahommed (or Vestecorp) in circumstances where the defendants admit that they had not even issued any invoices to Mr Dean to arrange payment on behalf of BAD Nominees, as I have referred to above. [566] Mr Dean had disputed Messrs Smits and Mahommed's entitlement to the $120,000 fees they claimed to have incurred as at 28 May 2016. [567] However, a dispute about fees is not evidence of an intention to "defraud".
Mr Mahommed also suggested that, if the BLE liquidator had transferred the title to the nine lots to BAD Nominees and BAD Nominees had then on-sold the nine lots, there was a risk that Mr Dean would "steal" the sale proceeds from the Dean Super Fund. The sole basis that Mr Mahommed articulated for that concern was his assertion that this had occurred in the past. [568] For the reasons explained at [555] above, that assertion is without foundation.

[74]

Potential challenges from other creditors of BLE

Mr Smits also gave evidence that the nomination of Garslev as the transferee of the nine lots had the advantage of avoiding challenges that would be raised by other secured creditors of BLE who claimed priority over BAD Nominees to the nine lots being transferred to and on-sold by BAD Nominees. [569] I reject that evidence. On the publication of Gleeson JA's reasons for judgment in October 2017, it became a matter of public record that the nine lots were to be transferred by the administrators of BLE to BAD Nominees (or its nominee). It is difficult to see how any other creditor of BLE could have challenged that transfer in light of the declaration made by Gleeson JA that BLE was authorised to sell the nine lots to BAD Nominees. [570] In any event, there is no evidence of any other creditor of BLE taking any step to interfere with that transfer in the period between October 2017 and March 2018.

[75]

Compliance with contractual obligations and obligations to creditors of BAD Nominees

Messrs Smits and Mahommed relied on three classes of alleged debts that they contend BAD Nominees was obliged to pay: taxation, GST on the sale of the nine lots, and their own fees.
There is no evidence to support the defendants' assertion that BAD Nominees had outstanding taxation liabilities: see [552]-[557] above. For the reasons there explained, I reject Mr Smits' evidence that he and Mr Mahommed were legitimately concerned about "the taxation situation" and held a genuine belief that they may be personally liable as attorneys for any taxation liabilities of BAD Nominees. [571] Moreover, even if BAD Nominees had outstanding tax liabilities, the authority of Messrs Smits and Mahommed under the Power of Attorney did not extend to paying or authorising payment of those liabilities out of the assets of BAD Nominees, as I have explained at [557] above.
As I have already mentioned, one of the alleged liabilities of BAD Nominees that Garslev was authorised by clause 3 of the 20 March 2018 deed to pay and set off against the $850,000 "consideration" was a sum of $185,000 "on account of any GST payable in respect of any supply of the Subject Lots" plus penalties, fines and general interest charge on that amount. [572] Neither Mr Smits nor Mr Mahommed were able to offer any basis for their asserted belief as at 20 March 2018 that any GST payable on the sale would be payable by the transferee (as opposed to the vendor) over and above the $1,000,000 reduction in BAD Nominees' claim against BLE that was the consideration for the nine lots under the 2 August 2017 contract. [573]
Despite the absence of any reason to believe that the transferee would be liable for GST, Mr Mahommed (purportedly in his capacity as attorney for BAD Nominees) wrote to Mr Dean (in his capacity as a director of BAD Nominees) on 27 June 2018 stating that the supply of the nine lots was subject to GST, asserting that the GST was a debt of the Dean Super Fund and asking Mr Dean to "respond urgently as to your views on the GST liability and as to remittance of the GST Amount to the ATO." The letter continued: Otherwise we will advise the ATO that you are the sole director, personally liable to pay the GST, general interest charges, penalties and fines … We require you to satisfy all obligations immediately and completely for the purpose of the GST Laws." [574] Again, Mr Mahommed issued these demands whilst keeping secret from Mr Dean that he had used the Power of Attorney to cause BAD Nominees to nominate Garslev as the transferee of the nine lots.

[76]

The "consideration" of $850,000

Mr Smits gave evidence that he discussed $850,000 with Mr Mahommed as an appropriate sum, even though there was a current market appraisal of $923,000. [582] Mr Smits said that he may have mentioned a figure of about $900,000 to his brother but emphasised that "I didn't really know how to negotiate". [583] Mr Smits' evidence is that he told Mr J Smits to speak with Mr Mahommed if he was interested in the nine lots because "Peter Mahommed was dealing with the offers or the potential targets to buy the lots and I didn't want to cut across that process. I just wanted to ask Jack to talk to Peter Mahommed about it to see whether there was genuine or deliverable interest in it." [584] According to Mr Smits, the $850,000 amount was ultimately decided through commercial negotiation between Mr Mahommed and Mr J Smits and that he was "comfortable with" that amount, [585] even though he and Mr Mahommed did not obtain a current valuation for the nine lots [586] and he (Mr Smits) considered that BAD Nominees' rights under the February 2013 security had some value over and above the value of the nine lots. [587]
Mr Mahommed gave very different evidence about the $850,000 sum. He said he spoke with Mr Smits and Mr J Smits together, and that his discussion with Mr J Smits was limited to how the proposed assignment would work (compared to a traditional sale). Mr Mahommed did not go into detail with Mr J Smits and does not recall discussing any other aspect of the transaction with him before the 20 March 2018 deed was executed. [588] According to Mr Mahommed, the $850,000 amount was discussed between himself and Mr Smits and set by Mr Mahommed based on his assessment of "what was a fair price in relation to a developer and a development". [589] When asked to explain in detail how he determined that $850,000 was a "fair price", Mr Mahommed answered: "General knowledge, my experience, obviously Mr Smits' experience. I spoke with real estate agents. I didn't spend a week coming up with that number. … It wasn't, I didn't sit down for a week and analyse it, right?". [590] Mr Mahommed did not identify his experience to which he was referring in that answer. He had earlier given evidence that he had never been involved in a property development. [591] Mr Mahommed accepted, without hesitation, that he did no detailed analysis before setting the $850,000 price. [592]

[77]

Conclusions in relation to the 20 March 2018 deed

When asked in cross-examination to identify what was the benefit to BAD Nominees of entering into the 20 March 2018 deed, Mr Mahommed replied: "Well I guess the benefit is, is we actually had a buyer for the nine lots." [605] However, whether that amounted to a benefit for BAD Nominees depends on the terms of the assignment to Garslev of BAD Nominees' right to receive the transfer of the nine lots and its other rights that were the subject of the 20 March 2018 deed.
The absence of any evidence of any serious attempt to identify a buyer for the nine lots other than Garslev, the absence of any detailed analysis undertaken to ascertain a fair price for the nine lots and the fact that the $850,000 sum was not even reached through negotiation with Garslev but was unilaterally "set" by Mr Mahommed and reflected a $73,000 discount on the market appraisal for the nine lots alone are strong indications that the $850,000 sum was less than the fair value for the rights in respect the nine lots and the other rights assigned to Garslev under the 20 March 2018 deed.
However, even assuming in favour of the defendants that the $850,000 amount did represent fair value, it was plainly contrary to the interests of BAD Nominees to enter into the 20 March 2018 deed permitting "payment" of the $850,000 in the manner described above, the effect of which was to empower Garslev to determine whether and in what amounts fees allegedly payable to Messrs Smits and Mahommed and Vestecorp would be paid out of the $850,000, without investigating their entitlement to the fees claimed and without reference to or consultation with BAD Nominees.
Neither Mr Smits nor Mr Mahommed offered any credible reason why the transaction was not structured so that BAD Nominees received the monetary sum of $850,000 from which any fees allegedly owing to Messrs Smits and Mahommed and Vestecorp could paid once invoices for the fees had been presented to BAD Nominees and after resolution of any disputes concerning those fees.
In October 2017, Mr Mahommed had put forward a proposal to that effect, involving the payment of the sale proceeds of the nine lots into a controlled monies account from which no withdrawals would be made without seven days prior notice to Mr Dean. [606] However, by March 2018 Mr Mahommed had decided that "all bets are off, Mr Dean pays full freight for everything, there's no more compromises". Mr Mahommed's attitude was a reaction to what he perceived as Mr Dean's failure to accept the "compromise" of $120,000 that Messrs Smits, Mahommed and Vestecorp offered to accept for their fees at the end of May 2016 [607] and the subsequent "offer" to accept lots 48 and 49 in satisfaction of fees said to be owed to Vestecorp in June 2017, [608] as a result of which Mr Mahommed had formed the view that Mr Dean did not want to pay. [609]

[78]

Breaches of fiduciary duties by Messrs Smits and Mahommed in entering into the Garslev deeds

It will be recalled that, after the 20 March 2018 deed was entered into, the BLE liquidator delivered a signed transfer of the nine lots to Garslev on 17 July 2018 and those transfers were subsequently registered on 5 November 2018. [619] The Garslev deeds were entered into on the same date.
I have referred to the terms of the Garslev deeds at [322]-[349] above. The parties' submissions about whether the deeds involved a breach of fiduciary or fraud or the power by Messrs Smits and Mahommed reflected their pleaded contentions summarised at [350]-[359] above.
Mr Smits drafted both the deed of assignment and the deed of settlement and both deeds were signed on behalf of BAD Nominees by Mr Mahommed purporting to exercise his authority under the Power of Attorney. [620] Mr Smits gave evidence that "I knew that, if necessary, if I thought that there was some breach or something of that nature, that I could intervene as an attorney, and then it would have to be a matter of a joint decision or a matter for some other way of resolving". [621] Mr Smits did not see any need to intervene to prevent Mr Mahommed from causing BAD Nominees to enter into the Garslev deeds.
Pursuant to the 5 November 2018 deed of assignment, Mr Smits assigned to Garslev the debts that he claimed were owing to him, and would become payable to him in the future, in respect of legal services under the various retainer agreements that Mr Mahommed had signed on behalf of BAD Nominees. The consideration for the assignment was a promise by Garslev to pay Mr Smits an amount equivalent to the assigned debts out of the proceeds of realisation of part of the development being undertaken by Garslev in Yeppoon in Queensland. However, the amount of the alleged present and future debts was not specified. Clauses 1 and 2 of the deed purported to approve Mr Smits' invoices for payment, including invoices that had not yet been issued, and to waive the right of each party (except Mr Smits) to have Mr Smits' invoices assessed, taxed or subject to any other legal process. Mr Smits did not have his own invoices for legal costs up to 5 November 2018 available to him when he drafted clause 1 of the deed and he did not give his invoices to Mr Mahommed when he presented the deed to him for consideration and execution on behalf of BAD Nominees. [622] Mr Mahommed nevertheless executed the deed, including clause 1 approving those invoices for payment. By clause 5 of the deed, Garslev set off the amount of each alleged debt against the amount payable by Garslev under the 20 March 2018 deed.

[79]

Conclusions in relation to the Garslev deeds

For all of the reasons at [689]-[698] above and on the basis of the evidence there referred to, the Garslev deeds conferred on Mr Smits, Vestecorp and Garslev the benefits referred to at [671]-[672] above and ensured that BAD Nominees would receive no part of the $850,000 specified in the 20 March 2018 deed as the consideration for the nine lots. The Power of Attorney did not authorise the attorneys to confer those benefits on Mr Smits, Vestecorp and Garslev.
Mr Smits (by drafting the Garslev deeds and approving or acquiescing in the execution of the deeds on behalf of BAD Nominees by his co-attorney) and Mr Mahommed (by executing the Garslev deeds) breached their fiduciary duties owed to BAD Nominees by conferring those unauthorised benefits on Mr Smits and Vestecorp and on Garslev.
When the Garslev deeds were entered into, the following conflicts of interest continued to exist: 1. the interests of BAD Nominees in ensuring that its attorneys did not deal with its assets beyond the scope of the authority conferred on them by the Power of Attorney, and the interests of Mr Smits and Vestecorp in accessing or realising those assets in order to fund payment of fees that they asserted were owing to them; 2. the interests of BAD Nominees in having the opportunity to review and scrutinise the fees claimed by Mr Smits and Vestecorp prior to payment (including, the case of legal costs invoiced by Mr Smits, to have those costs assessed in accordance with the Uniform Law), and the interests of Mr Smits and Vestecorp in facilitating payment of their fees without such review or scrutiny in circumstances where Mr Dean had previously objected to the high level fees that they had claimed at the end of May 2016 and in June 2017; and 3. the interests of BAD Nominees in not paying fees for any work done by Mr Smits and Vestecorp that was not for the benefit of BAD Nominees, and the interests of: 1. Garslev in obtaining the benefit of any work to be done to enforce or advance the rights assigned to it under the 20 March 2018, yet deducting the fees for such work from the $850,000 "consideration" payable under the 20 March 2018 deed; and 2. Mr Smits and Vestecorp in having their fees for any such work paid without scrutiny.
By their conduct in relation to the Garslev deeds, Mr Smits and Mr Mahommed breached their fiduciary duties owed to BAD Nominees not to act in circumstances where there was a conflict between the interests of BAD Nominees and their own interests. They proceeded to act, and preferred their own interests and the interests Garslev to the interests of BAD Nominees.

[80]

Fraud on the power

As referred to at [249] and [357] above, the plaintiffs also allege that the use of the Power of Attorney to cause BAD Nominees to enter into the 20 March 2018 deed and the Garslev deeds was a fraud on the power because they used the Power of Attorney in furtherance of the Garslev conspiracy, to facilitate Messrs Smits and Mahommed determining the fees to be paid to them without the knowledge and approval of Mr Dean on behalf of BAD Nominees and to confer benefits on themselves and Garslev. [634]
I respectfully adopt Brereton J's summary of the principles applicable to the doctrine of fraud on the power in Hanock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646: [635] "[57] A power must be exercised in good faith for the purpose for which it was given, and not for an ulterior purpose - whether for the benefit of the trustee or otherwise - not contemplated by the instrument creating the power [Vatcher v Paull [1915] AC 372, 378 (Lord Parker); Cowan v Scargill [1985] Ch 270, 288D (Megarry VC)]. A 'fraud on a power' is an exercise of a power for such an extraneous purpose; in this context, the term 'fraud' does not necessarily involve conduct which would ordinarily be described as dishonest or immoral [Vatcher v Paull, 378; Re Crawshay [1948] Ch 1234]. Such an exercise of power for an extraneous purposes is invalid and void, as Dixon J said in Mills v Mills (1938) 60 CLR 150 (at 185): Directors of a company are fiduciary agents, and a power conferred upon them cannot be exercised in order to obtain some private advantage or for any purpose foreign to the power. It is only one application of the general doctrine expressed by Lord Northington in Aleyn v Belchier: 'No point is better established than that, a person having a power, must execute it bona fide for the end designed, otherwise it is corrupt and void.' See also Peters' American Delicacy Co Ltd v Heath (1939) 61 CLR 457, 511; Ngurli Ltd v McCann (1953) 90 CLR 425, 438-9; 447-8. … [60] In determining whether a power has been exercised for an extraneous or ulterior purpose, the Court determines first, as a matter of law, for what purpose or purposes the power may properly be exercised and secondly, as a matter of fact, whether the purpose for which the power was in fact exercised was within the category of permissible purposes [Chameleon Mining NL v Murchison Metals Limited [2010] FCA 1129, [112]]. In ascertaining the purpose for which the power was in fact exercised, the Court is concerned with the state of mind of the trustee and is informed by the surrounding circumstances, as was explained by the Privy Council in Howard Smith Ltd v Ampol Ltd [1974] AC 821 (at 835, citing Hindle v John Cotton Ltd (1919) 56 Sc LR 625, 630-631 (Viscount Finlay)): Where the question is one of abuse of powers, the state of mind of those who acted, and the motive on which they acted, are all important, and you may go into the question of what their intention was, collecting from the surrounding circumstances all the materials which genuinely throw light upon that question of the state of mind of the directors so as to show whether they were honestly acting in discharge of their powers in the interests of the company or were acting from some bye-motive, possibly of personal advantage, or for any other reason. [61] In that respect, the burden of proof is born by those who allege a fraud on the power [Askham v Barker (1853) 17 Beav 37, 44; 51 ER 945, 948 (Romilly MR); see also NSW Medical Defence Union v Crawford (1993) 31 NSWLR 469, 485-6 (Kirby P)]. However, the crucial question is simply whether the power (or discretion) was exercised bona fide for a proper purpose, and an answer that it was not does not depend in every case on proof of what the extraneous purpose was, so long as it can be established that the power was not exercised bona fide for the purpose for which it was conferred. In other words, it may be discernible that the power (or discretion) could not have been exercised bona fide for a proper purpose, without proving for what collateral purpose it was in fact exercised."

[81]

Garslev

As referred to at [458] above, the plaintiffs' claims against Garslev are put on three alternative bases: 1. Garslev is liable under the first limb of Barnes v Addy because it entered into the 20 March 2018 deed, received the transfer of the nine lots and entered into the Garslev deeds with knowledge of the breaches of Messrs Smits and/or Mahommed of their fiduciary duties in causing BAD Nominees to enter into those deeds and nominate Garslev as transferee; 2. Garslev induced or procured those breaches of fiduciary duty by Messrs Smits and/or Mahommed; and 3. Garslev is liable under the second limb of Barnes v Addy because it knowingly assisted Messrs Smits and/or Mahommed in their breaches of fiduciary duty which amount to a dishonest and fraudulent design.
However, the plaintiffs submitted that considering the case against Garslev through these alternative lenses "may add levels of unnecessary complexity" because in the circumstances of this case it is sufficient for the plaintiffs' claims for relief if Garslev induced or procured the breaches of fiduciary duty by Mr Smits and/or Mr Mahommed with knowledge of each of the elements of the deeds that go to make up the breach of fiduciary duties. [636] I will therefore address the second basis of the claim against Garslev in the first instance.
In order to establish liability of Garslev for inducing or procuring the breaches of fiduciary duty by Mr Smits and/or Mr Mahommed the plaintiffs must show that Garslev intentionally engaged in conduct that caused, and was intended to cause, those breaches and that Garslev knew that it was bringing about breaches of fiduciary duties. It is not necessary for the plaintiffs to establish that the fiduciaries' breaches were dishonest and fraudulent: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 (Farah v Say-Dee) at [161]-[163]; Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296; [2012] FCAFC 6 (Grimaldi) at [245] (Finn, Stone and Perram JJ) Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 (Hasler) at [67]-[68], [74]-[80], [106] (Leeming JA, Gleeson JA agreeing); Pittmore Pty Ltd v Chan (2020) 104 NSWLR 62; [2020] NSWCA 344 (Pittmore v Chan) at [55]-[56], [152]-[161], [171]-[196] (Leeming JA, Bell P and Brereton JA agreeing).
It must be demonstrated that Garslev had knowledge, of the kind identified in any of the first four of the five categories described in Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA [1993] 1 WLR 509 (at 575-576, 582), of the essential matters that go to make up the breaches of fiduciary duty (even if it did not know that those matters amounted to a breach of fiduciary duty), namely: 1. actual knowledge; 2. wilfully shutting one's eyes to the obvious; 3. wilfully and recklessly failing to make such inquiries as an honest and reasonable man would make; and 4. knowledge of circumstances which would indicate the facts to an honest and reasonable man. Knowledge of the fifth kind in the "Baden scale" (being knowledge of circumstances which would put an honest reasonable man on inquiry) will not suffice: Pittmore v Chan at [191]-[195].

[82]

Mr J Smits

The plaintiffs' claims for equitable compensation or restitution against Mr J Smits are put on two alternative bases: [651] 1. he is liable for procuring or inducing the breaches of fiduciary duty committed by Messrs Smits and Mahommed in entering into the 20 March 2018 deed and the Garslev deeds because he was a party to the alleged Garslev conspiracy in furtherance of which those three deeds were entered into and/or Messrs Smits and Mahommed allegedly acted as agents for him (as well as for Garslev) in entering into those three deeds; and/or 2. he knowingly assisted in those breaches of fiduciary duty, which were a dishonest and fraudulent design, because he failed to make the inquiries that an honest and reasonable person in his position would have made.
The plaintiffs have failed to prove the alleged Garslev conspiracy and the alleged agency for the reasons already explained above. It follows that I reject the plaintiffs' contention that Mr J Smits is liable on the first basis set out above.
I also reject the plaintiffs' second contention above. It was Garslev that knowingly assisted the breaches of fiduciary duty by Messrs Smits and Mahommed by Garslev entering into the 20 March 2018 deed and the Garslev deeds. Mr J Smits was not a party to those deeds. He caused Garslev to enter into those three deeds with the knowledge that he had as at 20 March 2018 and 5 November 2018 in his capacity as the sole director of Garslev. He had no involvement in the transactions in any other capacity. The plaintiffs' submissions did not articulate any reason why Mr J Smits personally (as opposed to Garslev) should be held to have knowingly assisted in the breaches of fiduciary duty of Messrs Smits and Mahommed, or why Mr J Smits should be personally liable for those breaches in which Garslev knowingly assisted: Pittmore v Chan at [162]-[170] (Leeming JA, Bell P and Brereton JA agreeing).

[83]

Remedies for breaches of fiduciary duties

The range of remedies sought by the plaintiffs are summarised at [456]-[461] above.
In my opinion, the equitable remedies that are appropriate to the circumstances of the breaches of fiduciary duty by Messrs Smits and Mahommed in which Garslev knowingly assisted [652] are orders rescinding the 20 March 2018 deed and the Garslev deeds, an order requiring Garslev to account as constructive trustee for the benefit that it has derived from knowingly assisting in the breaches of fiduciary duty, and an order requiring Messrs Smits and Mahommed and Garslev to pay equitable compensation for the loss that will not be addressed by Garslev accounting for the benefits it has derived.
Rescission is available in equity's exclusive jurisdiction to set aside a contract or transaction entered into in breach of fiduciary duty. The setting aside takes effect from the date of the order, but the effect of the order is to set aside the contract or transaction ab initio. For the reasons that follow, the other orders that I have indicated immediately above will restore the parties to the position they were in before entering into the deeds, or at least do practical justice by restoring them to substantially that position: Akierman Holdings Pty Ltd v Akerman (No. 2) (2020) 147 ACSR 63; [2020] NSWSC 970 (Akerman No. 2) at [95]-[96]; J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (5th ed, 2015) at [25-025], [25-065].
Rescission of the deeds will not, by itself, restore the trustee of the Dean Super Fund (formerly BAD Nominees, and now Overdean) to the position that it would have been in if its rights under the 2 August 2017 contract and its other rights against BAD Nominees had not been assigned to Garslev.
In relation to the rights under the 2 August 2017 contract, that will be achieved by an order requiring Garslev to account to Overdean (as the present trustee) for the benefits derived from its knowing participation in the breaches of fiduciary duty that were a dishonest and fraudulent design: Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609; [2014] NSWCA 266 at [64]-[83] (Leeming JA, Barrett and Gleeson JJA agreeing); McFee v Reilly [2018] NSWCA 322 at [107] (Leeming JA, McColl and Payne JJA agreeing).
The trustee's rights under the 2 August 2017 contract entitled it to a transfer of the nine lots. The value of those rights, and the benefit that Garslev derived from the assignment of those rights, is reflected in the sale proceeds of the nine lots less the stamp duty, legal costs and disbursements (including registration fees) that were required to be paid by the transferee from BLE in order to become registered as the proprietor of the nine lots. There is no evidence that Garslev incurred any other expenses in connection with the transfer of the nine lots that would need to be taken into account in determining the value of the rights under the 2 August 2017 contract or in achieving practical justice between the parties. [653] The gross sale proceeds of the nine lots amounted to $1,126,000. [654] After deducting stamp duty and registration fees of $57,800 [655] and legal costs and disbursements of $9,621, [656] the value of the rights under the 2 August 2017 contract that were assigned to Garslev was $1,058,579. [657]

[84]

Consideration of claims and cross-claims in relation to amounts allegedly owing by BAD Nominees to Messrs Smits, Mahommed and Vestecorp, including fees for work allegedly performed by Mr Smits and Vestecorp

[85]

Introductory observations

As referred to at [753] above, the cross-claim is for a total sum of $769,397, after deducting the $850,000 that was to be received by Mr Smits, Mr Mahommed and Vestecorp under the 20 March 2018 deed and the Garslev deeds from a total amount of $1,619,397 allegedly owing to them by BAD Nominees. In order to achieve practical justice between the parties on rescission of the 20 March 2018 deed and the Garslev deeds, the cross-claim is to be determined as if the $850,000 had not been deducted from the total amount claimed. That total amount of $1,691,397.92 is comprised of the amounts allegedly owing by BAD Nominees to Mr Smits, Mr Mahommed, Vestecorp and/or Garslev that are set out in Schedule B to the Cross-Claim. It is convenient to reproduce Schedule B in full here: ACCOUNT RECONCILIATION OF CREDITORS for B.A.D Nominees (NSW) Pty Ltd for the period: 5/5/2016 to 15/12/2018: No. Name Debit Credit Balance Source 1 Mahommed 28,750 - 28,750.00 DOA 2 [664] 2 Mahommed 20,500.00 - 49,250.00 DOA 2 3 Vestecorp 28,750.00 - 78,000.00 DOA 2 4 L. Smits 201,500.00 - 279,500.00 CSA [665] 5 Vestecorp 60,712.00 - 340,212.00 CSA 6 Vestecorp 5,312.09 - 345,524.09 CSA 7 Vestecorp 38,165.42 - 383,689.51 CSA 8 L. Smits to be advised - 383,689.51 CSA 9 Smits Lawyer 138,380.00 - 522,069.51 Proceedings: 2017/279755 10 Smits Lawyer 133,509.00 - 655,578.51 Proceedings: 2017/279755 2014/229138 11 SRO Vic 55,000.00 - 710,578.51 Stamp Duty on BAD Contract [666] 12 L.A Wodonga 2,800.00 - 713,378.51 Agent costs re transfer 13 Vestecorp 35,186.25 - 748,564.76 CSA 14 Vestecorp 14,694.17 - 763,258.93 CSA 15 L. Smits to be advised - 763,258.93 CSA 16 Legal cost 50,000.00 - 813,258.93 Order for Security for Costs 17 Vestecorp 50,719.17 - 863,978.10 CSA 18 ATO 85,000.00 - 948,978.10 GST 19 Smits, Mahommed & Vestecorp 250,000.00 - 1,198,978.10 IAD 20 L.A Wodonga 9,621.02 - 1,208,599.12 Victorian legal costs 21 Vestecorp 32,262.08 - 1,240,861.20 CSA 22 Smits Lawyer 176,545.05 - 1,417,406.25 Proceedings: 2014/229138 & 2018/99714 23 Smits Lawyer 71,250.00 - 1,488,656.25 Proceedings: 2014/229138 & 2018/99714 24 Vestecorp 35,841.67 - 1,524,497.92 CSA 25 Smits Lawyer 94,900.00 - 1,619,397.92 Proceedings: 2014/229138 & 2018/99714 26 Valuable consideration 850,000 DOA 3 [667] Total estimated shortfall - 769,397.92

[86]

As will be readily apparent, the total sum of $1,691,397.92 is principally comprised of fees allegedly owing by BAD Nominees to Mr Smits and Vestecorp: see items 4-10, 13-15, 17, 19 and 21-25 of Schedule B (noting that no amount is claimed in respect of items 8 and 15). It is convenient to address those items before addressing the remaining amounts claimed in Schedule B.
For the reasons I have already explained at [585]-[586] and [609] above, I reject the plaintiffs' submission [668] that the charging of fees by Messrs Smits and Mahommed (through Vestecorp, in Mr Mahommed's case) necessarily involved the attorneys as fiduciaries acting in circumstances of a conflict between their own interests and BAD Nominees' interests, or making an unauthorised profit and that their fees are irrecoverable for that reason.

[87]

Fees charged by Mr Smits for May 2016

Item 4 of Schedule B relates to an invoice issued by Mr Smits bearing the date 19 September 2018 in the amount of $201,500 for fees allegedly payable under the Consultancy Agreement in respect of work said to have been done during May 2016. [669]
The 68 items of work set out in Mr Smits' invoice fall into the following categories: 1. legal research in relation to powers of attorney and drafting the Consultancy Agreement, IAD and the Power of Attorney and an associated resolution of BAD Nominees (invoice items 22-24 and 30-31); 2. reviewing documents relating to the statutory demand issued to BAD Nominees by Vangory Holdings as referred to at [49]-[52] above (invoice items 13-14 and 32-33) and reviewing documents relating to the assignments of third party debts to BAD Nominees that were the subject of the three deeds of assignment dated 9 May 2016 referred to at [96]-[97] above (invoice items 8 and 20); 3. reviewing documents provided by Mr Dean, evidence filed in the 2014 proceedings, judgments delivered in the 2014 proceedings, Mr Dean's correspondence with the administrators of BLE and GEP and the administrators' reports to creditors (invoice items 4, 5, and 6, 15, 38 and 51). I infer that Mr Smits reviewed these documents for the purpose of taking steps to enforce BAD Nominees' rights as a creditor of BLE and GEP as referred to in the Power of Attorney, which Messrs Smits (and Mr Mahommed) did take as referred to at (5) below; 4. considering legal issues relevant to the debts owed by BLE and GEP to BAD Nominees and BAD Nominees' claims as a creditor in the administration of those companies, including its security position and the priority of its security interest, and any prior assignment by BAD Nominees of its rights in respect of GEP and BLE (invoice items 6, 9-11 and 16-19). Again, I infer that Mr Smits reviewed these documents for the purpose of taking steps to enforce BAD Nominees' rights as a creditor of BLE and GEP as referred to in the Power of Attorney; 5. considering value of securities held by BAD Nominees and strategies for enforcement and realisation, drafting and engaging in correspondence and participating in meetings and discussions with the administrators in relation to the s 78 notice, the security position and priority of BAD Nominees and other legal issues relating to the administrations (invoice items 25-28, 34, 35-37, 42, 44, 46, 47, 54, 56, 58, 61 and 62), including: 1. preparing the letter sent to the administrators on 9 May 2016 which, as referred to at [119]-[124] above, raised legal issues concerning the validity of securities held by other creditors of BLE, legal issues concerning the priority between the claims of secured creditors and the administrators' claim for remuneration, issues concerning the legal effect of certain orders made in the 2014 proceedings, and issues concerning the beneficial ownership of certain property of GEP (accompanied by an analysis of a case law concerning the application of the principles in Barnes v Addy); 2. issuing the notice under s 78 of the Transfer of Land Act as referred to at [125] above, which Mr Smits accepted in cross-examination was a type of document commonly drawn and served by solicitors on behalf of their clients. Mr Smits gave evidence that, before issuing this notice, he satisfied himself that BAD Nominees had a right to possession of the properties on the basis of his review of the loan and security documents and the legal opinions he formed about BAD Nominees' rights under those documents; [670] 3. preparing the letter sent to the administrators on 12 May 2016 which, as referred to at [131] above, set out further legal analysis in support of Mr Smits' contentions made in his 9 May 2016 letter and in support of his contention that the s 78 notice had been validly issued. Mr Smits acknowledged in cross-examination that the letter expressed legal opinions on behalf of BAD Nominees (and also, according to Mr Smits, on his own behalf) and that it was a letter that would normally be sent by a solicitor on behalf of a client; [671] 4. attending a meeting with the administrators and their solicitors on 27 May 2018 which, as referred to at [132] above, included a lengthy discussion concerning the priority of BAD Nominees' rights as a creditor and potential causes of action in relation to voidable transactions; and 5. preparing the draft Heads of Agreement sent to the administrators on 30 May 2016, as referred to at [133] above; 1. legal research, including in relation to issues raised in correspondence with the administrators (invoice items 37 and 39-41); 2. conference calls with potential receivers to replace the administrators (invoice item 49), which appear to have been a preliminary step for a contemplated application to set aside the orders appointing the administrators or to terminate their appointment, as had been foreshadowed in Mr Smits' letter to the administrators dated 12 May 2016; 3. negotiations with Mr Photios in relation to a sale of part of the Beechworth land (invoice items 50 and 59), which appear to be consistent with the position advanced by Messrs Smits and Mahommed on behalf of BAD Nominees at their meeting with the administrators on 27 May 2016 that BAD Nominees "wanted to achieve a take out of its position", as a sale of part of the land may raise funds from which the amount claimed by BAD Nominees could be paid; 4. meetings, discussions and correspondence with Mr Dean and/or Messrs Conlon and Armstrong and with Mr Mahommed (invoice items 2, 3, 21, 43, 45, 48, 52, 53, 55, 57, 60, 63-64, 67-68); and 5. travel time (invoice items 1, 3, 52 and 66).

[88]

Fees charged by Vestecorp for May 2016

Item 5 of Schedule B relates to an invoice issued by Vestecorp bearing the date 19 September 2016 in the amount of $60,172 for fees allegedly payable under the Consultancy Agreement in respect of work said to have been done during May 2016. [687]
The work described as having been performed by Mr Mahommed in May 2016 in Vestecorp's invoice dated 19 September 2016 is predominantly of the same character as that described in Mr Smits' invoice dated 19 September 2018. For example, the work described includes: 1. preparing the Consultancy Agreement (invoice entry for 6 May 2016); 2. reviewing documents relating to the statutory demand issued to BAD Nominees by Vangory Holdings and preparing the three deeds of assignment dated 9 May 2016 referred to at [96]-[97] above and preparing notices of assignment and demands for payment of the assigned debts to be issued by BAD Nominees to Vangory Holdings (for example, invoice entries for 6 and 8 May 2016); 3. reviewing mortgage documents and agreements executed by BAD Nominees and documents of BAD Nominees relating to securities and agreements (for example, invoice entries for 5 and 6 May 2016); 4. reviewing documents relating to the 2014 proceedings including orders made by the Court, reviewing correspondence between Mr Dean and the administrators, reviewing the actions of the administrators and receivers and their effects on the debt and discussing and formulating "strategies to counteract the negative actions of the administrators" and the costs of claiming possession as mortgagee in possession or appointing a receiver compared to the risks of protracted litigation (invoice entries for 6, 7, 8, 10 and 11 May 2016); 5. researching and reviewing provisions of the Corporations Act (for example, invoice entries for 7 and 11 May 2016); 6. reviewing correspondence from and drafting correspondence to the administrators, in conjunction with Mr Smits (for example, invoice entry for 12 May 2016); 7. preparing for and attending discussions and meetings with the administrators and their solicitors at which legal issues were discussed, referred to at [132] (invoice entries for 14, 16, 19, 20, 26 and, 27 May 2016 8. the negotiations with Mr Photios and related discussions with Mr Smits (for example, invoice entries for 16 and 20 May 2016); 9. the communications with a potential receiver (for example, invoice entry for 17 May 2016); 10. meetings, discussions and correspondence with Mr Dean and Messrs Conlon and Armstrong and with Mr Smits (for example, invoice entries for 8, 12, 16 and 28 May 2016); and 11. research in relation to and drafting the Heads of Agreement sent to the administrators on 30 May 2016 (invoice entry for 29 May 2019).

[89]

Fees charged by Vestecorp for June 2016

Item 6 of Schedule B relates to Vestecorp's invoice dated 24 September 2018 in the amount of $5,312.09 for fees allegedly payable under the Consultancy Agreement in relation to work described as having been done during the month of June 2016. [689]
It is my opinion that the work described in this invoice, understood in the context of the 2014 proceedings, the legal arguments and strategies that Messrs Smits and Mahommed were seeking to advance vis-à-vis the administrators in the context of those proceedings and relevant events in late May and June 2016, involves activities that constitute engaging in legal practice within the meaning of s 10 of the Uniform Law. In particular, the work described in the invoice includes: 1. discussion with Mr Smits about a legal response to Mr Dean's attempt to revoke the Power of Attorney on 31 May 2016; [690] 2. reviewing and discussing with Mr Smits an interlocutory process and supporting affidavits filed by the administrators together with correspondence received from the administrators (for almost four hours); 3. reviewing, discussing and drafting with Mr Smits the letter sent to Robb J on behalf of BAD Nominees on 10 June 2016; [691] 4. reviewing and discussing with Mr Smits orders proposed by various parties in the 2014 proceedings and the orders to be proposed on behalf of BAD Nominees; 5. further liaison with Mr Photios about his potential purchase of part of the Beechworth land in connection with the negotiating position adopted with the administrators by Messrs Smits and Mahommed on behalf of BAD Nominees for a "take out" of BAD Nominees' "position", and reviewing and discussing with Mr Smits a draft contract for sale; and 6. further liaison with potential receivers in connection with a contemplated application for orders setting aside the appointment of the administrators or removing the administrators.
The nature of the work reflects Mr Mahommed's evidence that he was "directly involved in the provision of the legal services, often for extended hours, on every relevant day". [692] That evidence was given in relation to the period after Mr Smits became an Australian legal practitioner in February 2017, but it fits with Mr Mahommed's description of the work he claims to have undertaken together with Mr Smits in June 2016 in his invoice issued on 24 September 2018.
As I have said above, neither Vestecorp nor Mr Mahommed was a "qualified entity" as defined in s 6 of the Uniform Law. Assuming (without deciding) that Mr Mahommed in fact carried out the work described in the 24 September 2018 invoice, Vestecorp engaged in legal practice by performing the work through Mr Mahommed. Vestecorp is therefore precluded by s 10(2) of the Uniform Law from recovering from BAD Nominees the fees referred to in item 6 of Schedule B in the Further Amended Cross-Claim and BAD Nominees is not indebted to Vestecorp for that amount. It is therefore not necessary to consider the other issues raised by the plaintiffs in relation to this invoice. [693]

[90]

No work done by Mr Smits or Vestecorp during the period July 2016 to June 2017

Mr Smits has not issued an invoice for fees in respect of any work claimed to have been done during the period from June 2016 to June 2017. [694] Mr Mahommed's evidence suggests that Mr Smits was involved in the preparation of the letter that was sent to Robb J on 10 June 2016. [695] Mr Smits also wrote to the administrators on 14 June 2017 in relation to their offer to transfer the nine lots to BAD Nominees in consideration for a reduction of $1,000,000 in BAD Nominees' claim against BLE. [696] These isolated work items have not been included in any invoice issued by Mr Smits. There is no evidence recording any other work having been done by Mr Smits on behalf of or in relation to BAD Nominees during that period.
In cross-examination, Mr Smits said that he did do some work during that period but could not recall what it was. Mr Smits claimed that he did not invoice for the work because he could not be bothered. [697] If and to the extent that Mr Smits was suggesting that he had undertaken work during this period other than the preparation of the 10 June 2016 submission to Robb J and the 14 June 2017 letter, I reject that evidence. In circumstances where Mr Smits was "bothered" to prepare an invoice in September 2018 for work performed in May 2016, I do not accept that he performed any (unspecified) material work during the period June 2016 to October 2017 and did not bother to charge for it.
In cross-examination, Mr Mahommed initially said that he did not believe that he had stopped performing work for Vestecorp between June 2016 and June 2017, but that he would have to rely on his invoices which he said would record any work that he had performed. [698] After being shown his invoices and being reminded that there were no invoices describing any work done between July 2016 and June 2017 (save for a single entry in May 2017), Mr Mahommed flatly denied that he had done no work during the period from July 2016 to the end of April 2017. That denial was not accompanied by any claimed positive recollection that work was in fact done. I reject it as inconsistent with Mr Mahommed's earlier evidence in which he pointed to his invoices as telling the story. I also note that the single entry relating to May 2017 in Vestecorp's invoice dated 24 September 2018 [699] describes discussing with and instructing Mr Smits in relation to alleged defamatory comments said to have been made by Mr Armstrong. On the face of it, that description is not consistent with the work having been done on behalf of BAD Nominees (as opposed to on behalf of Mr Mahommed, or possibly Messrs Smits and Mahommed).

[91]

Fees charged by Mr Smits in the period from June to December 2017

Mr Smits issued one invoice for work said to have been performed in this period, being his invoice dated 12 December 2017 for $138,380 that is the subject of item 9 in Schedule B of the Further Amended Cross-Claim. [700] This was the first invoice issued by Mr Smits after he obtained a practising certificate on 7 February 2017.
The invoice relates to work said to have been performed during the period in which Mr Smits was retained under the retainer agreement dated 14 September 2017 [701] in connection with the hearing before Gleeson JA in the 2017 proceedings.
For the reasons already explained at [511]-[526] above, the doctrine of Anshun estoppel precludes the plaintiffs from maintaining their allegation in these proceedings that the 14 September 2017 retainer agreement involved a breach of the attorneys' fiduciary duty or a fraud on the power.
The question that now falls to be determined is whether BAD Nominees is indebted to Mr Smits for the fees charged in his invoice dated 12 December 2017.
As referred to at [420] above, the plaintiffs contend that Mr Smits' practising certificate permitted him to practise as a solicitor only for a corporation mentioned in s 6 of the Legal Professional Regulation 2007 or for certain approved pro bono projects, and that Mr Smits is therefore precluded from recovering from the plaintiffs fees for any legal services provided to them as described in this invoice.
I reject the plaintiffs' contention. The statement concerning engaging in legal practice for a corporation mentioned in s 6 of the Legal Profession Regulation 2007 and for a pro bono project approved by the National Pro Bono Resource Centre was an entitlement and not a limiting condition on Mr Smits' right to practise under the unrestricted practising certificate. That is plain from the terms of the certificate and its annexure and from the statutory provisions under which the certificate was issued: see Legal Profession Act 2007 (Qld), ss 24(2)(e) and 52-53; Legal Profession Regulation 2007 (Qld), s 6.
I have nevertheless concluded that BAD Nominees is not indebted to Mr Smits for those claimed fees. The evidence does not establish that the fees charged reflect the time taken for any work actually performed at the hourly rate specified in the 14 September 2017 retainer. The invoice is for a lump sum calculated on the basis of "say" 14 days' work at "say" 12 hours per day plus four days' travel. Mr Smits did not keep any contemporaneous record of his time, but prepared the invoice in mid-December 2017 (some six weeks after the work had been completed) based on his recollection of what had occurred. [702] There is no evidence that provides any basis for me to accept that Mr Smits spent 14 full days preparing for a hearing in which the issues were confined to whether declarations should be made that the administrators and BAD Nominees had entered into the 2 August 2017 contract and that the administrators were authorised to do so (noting that the administrators were seeking those declarations and BAD Nominees had no reason to oppose them given the failure of the May 2016 negotiations conducted by Messrs Smits and Mahommed), the validity of the Power of Attorney (and whether it had been revoked), and the authority to appoint solicitors to act on behalf of BAD Nominees. All of the affidavits (with the exception of Mr Mahommed's affidavits drafted by Mr Smits) were brief. [703] I also observe that at least some of the work described in Mr Smits' invoice has no apparent connection with the subject matter of the 2017 proceedings and had already been charged for in Mr Smits' invoice issued under the Consultancy Agreement for work allegedly done in May 2016. [704] There is no evidence that would provide a basis for me to make a finding as to the time actually spent by Mr Smits doing any work in preparation for the hearing before Gleeson JA, to which the hourly rate specified in the 14 September 2017 retainer might be applied. For those reasons, Mr Smits has failed to prove that BAD Nominees is indebted to him for the fees claimed in his 12 December 2017 invoice.

[92]

Fees charged by Vestecorp in the period from June to December 2017

Vestecorp issued one invoice for work said to have been performed in this period, being the invoice dated 24 September 2018 for $38,165.42 that is the subject of item 7 in Schedule B of the Further Amended Cross-Claim. [706]
For the same reasons given in relation to Vestecorp's other invoice issued on the same date at [804]-[807] above, Vestecorp is precluded by s 10(2) of the Uniform Law from recovering from BAD Nominees the $38,165.42 fees in the invoice that is the subject of item 7 of Schedule B and BAD Nominees is not indebted to Vestecorp for that amount. A handful of entries in this invoice relate to discussions with Mr Smits concerning the 2 August 2017 contract. The balance of the work described is research, review of affidavits and exhibits, review of submissions, discussions with Mr Smits concerning the same and attendance at the hearing before Gleeson JA, followed by some review of correspondence and discussions with Mr Smits leading up to the subsequent hearing before Brereton J and reviewing sections of the Real Property Act and Contracts Review Act 1980 (NSW).
That conclusion renders it unnecessary to address the other matters raised by the plaintiffs in relation to this invoice. [707]

[93]

Fees charged by Mr Smits in February 2018

Mr Smits issued one invoice for work said to have been performed in this period, being his invoice dated 30 March 2018 for the amount of $133,509 referred to in item 10 in Schedule B of the Further Amended Cross-Claim. [708]
The invoice relates to work said to have been performed during the period in which Mr Smits was retained under the retainer agreement dated 14 September 2017 [709] in connection with the February 2018 hearing before Brereton J in the 2017 proceedings.
I have concluded that BAD Nominees is not indebted to Mr Smits for those claimed fees. Again, the evidence does not establish that the fees charged reflect the time taken for any work actually performed at the hourly rate specified in the 14 September 2017 retainer. The invoice is for a lump sum calculated on the basis of "say" 12 days' work at "say" 12 hours per day plus four days' travel. Mr Smits did not keep any contemporaneous record of his time spent in performing the work that he claims to have performed. [710] There is no evidence that provides any basis for me to accept that Mr Smits spent 12 full days preparing for a hearing that was listed for two days in which the issues were a sub-set of the limited issues in respect of which he had already prepared for a hearing before Gleeson JA just a few months earlier in October 2017. [711] I observe that the work described in Mr Smits' invoice includes "extensive preparation of 2-3 days of Opening Address", notwithstanding that the hearing was listed for two days. Nor is there any evidence that would provide a basis for me to make a finding as to the time actually spent by Mr Smits doing any work in preparation for that hearing, to which the hourly rate specified in the 14 September 2017 retainer might be applied. For those reasons, Mr Smits has failed to prove that BAD is indebted to him for the fees claimed in his 30 March 2018 invoice.
In light of that conclusion, I do not find it necessary to determine the matters raised by the plaintiffs in relation to this invoice. [712]
For those reasons, BAD Nominees is not indebted to Mr Smits for the $133,509 in item 10 of Schedule B of the Further Amended Cross-Claim.

[94]

Remaining fees charged by Mr Smits

The remaining fees of Mr Smits that are the subject of the cross-claim are: 1. item 22 of Schedule B, being Mr Smits' invoice dated 3 December 2018 in the amount of $176,545.05 for fees said to be payable by BAD Nominees for work described as having been performed under Mr Smits' retainer dated 27 September 2018 during the period from 1 September 2018 to 2 November 2018 in relation to the appointment of Overdean as trustee of the Dean Super Fund and the proceedings before Black J referred to at [279]-[308] above; [713] 2. item 23 of Schedule B, being Mr Smits' invoice dated 15 December 2018 in the amount of $71,250 for fees said to be payable by BAD Nominees for work described as having been performed under Mr Smits' retainers dated 10 August 2018, 17 August 2018 and 27 September 2018 during the period from 1 November to 30 November 2018 in relation to the hearing before Black J (charging again for that appearance which was included in Mr Smits' 3 December 2018 invoice) and in preparation for the hearing before Parker J referred to at [368]-[382] above; [714] and 3. item 25 of Schedule B, being Mr Smits' further invoice dated 15 December 2018 in the amount of $94,900 for fees said to be payable by BAD Nominees for work described as having been performed under Mr Smits' retainers dated 10 August 2018, 17 August 2018 and 27 September 2018 during the period from 1 December to 14 December 2018 in final preparation for and appearing at the hearing before Parker J. [715]
By the Power of Attorney, Messrs Smits and Mahommed were appointed to act on behalf of BAD Nominees to exercise its rights in relation to BLE and GEP. [716] Once those rights had been assigned to Garslev under the 20 March 2018 deed, there was nothing further for Messrs Smits and Mahommed to do on behalf of BAD Nominees in relation to BLE and GEP and anything that they did do in the name of BAD Nominees was for the benefit of Garslev rather than for the benefit of BAD Nominees. [717]
Even assuming that it was within the scope of the authority conferred by the Power of Attorney for Mr Mahommed to enter into the retainer agreements with Mr Smits referred to above on behalf of BAD Nominees after 20 March 2018, his doing so was a fraud on the power as the plaintiffs contend. The plaintiffs are therefore entitled to a declaration that each of the retainer agreements dated 10 August 2018, 17 August 2018 and 27 September 2018 are void. [718] I reject each of the matters relied on by the defendants in resisting that relief. [719] I do not find it necessary to address each of those matters specifically at this point in these reasons, as they are either plainly untenable on their face [720] or the substance of them has been rejected elsewhere in these reasons.

[95]

Remaining fees charged by Vestecorp

The remaining fees of Vestecorp that are the subject of the Cross-Claim are: 1. item 13 of Schedule B, being Vestecorp's invoice dated 4 September 2018 in the amount of $35,186.25 for fees said to be payable by BAD Nominees for work described as having been performed by Mr Mahommed during the period from 1 January 2018 to 31 August 2018; [724] 2. item 14 of Schedule B, being Vestecorp's invoice dated 4 October 2018 in the amount of $14,694.17 for fees said to be payable by BAD Nominees for work described as having been performed by Mr Mahommed during the month of September 2018; [725] 3. item 17 of Schedule B, being Vestecorp's invoice dated 5 November 2018 in the amount of $50,719.17 for fees said to be payable by BAD Nominees for work described as having been performed by Mr Mahommed during the month of October 2018; [726] 4. item 21 of Schedule B, being Vestecorp's invoice dated 7 December 2018 in the amount of $32,262.08 for fees said to be payable by BAD Nominees for work described as having been performed by Mr Mahommed during the month of November 2018; [727] and 5. item 24 of Schedule B, being Vestecorp's invoice erroneously dated 13 December 2016 in the amount of $35,841.67 for fees said to be payable by BAD Nominees for work described as having been performed by Mr Mahommed during the period from 1 December to 12 December 2018. [728]
To the extent that Vestecorp's invoice dated 4 September 2018 relates to the period from 1 January 2018 to 20 March 2018, it contains a large number of entries for work described in terms that, understood in the context of the ongoing 2014 proceedings and matters in issue in the hearing before Brereton J in the 2017 proceedings, refer to activities that constitute engaging in legal practice within the meaning of s 10 of the Uniform Law. For example, the invoice includes entries for preparation of a court book, drafting a chronology, reviewing lists of authorities, drafting "examination questions" for Messrs Dean, Conlon and Armstrong, and reviewing and discussing with Mr Smits submissions prepared on behalf of Mr Dean. Vestecorp is precluded by s 10(2) of the Uniform Law from recovering any payment from BAD Nominees for these kinds of work.
Whilst the entries for the period 1 January 2018 to 20 March 2018 do include some matters that appear to be work of a non-legal nature, the invoice is not presented in a manner that permits these items to be separated from the legal practice referred to above. Nor is there any evidence that would facilitate quantification of fees in respect that work, assuming for present purposes that the work was in fact done.

[96]

Claimed fee of $250,000 under the IAD

Item 19 of Schedule B is the fee that Messrs Smits and Mahommed and Vestecorp claim BAD Nominees is obliged to pay to them under clause 1 of the IAD. [733]
For the reasons explained at [602] above, clause 1 of the IAD, properly construed, entitles Messrs Smits and Mahommed and Vestecorp to 25 per cent of recoveries achieved by their efforts.
As I have explained at [158]-[163] above, BAD Nominees' right to the transfer of the nine lots arose from the administrators' acceptance of an offer made by Mr Cohen (purportedly acting on behalf of BAD Nominees on the instructions of Mr Dean) on 2 August 2017. That offer accepted by the administrators had its genesis in negotiations with the administrators initiated by Mr Orlizki (purportedly acting for BAD Nominees on instructions from Mr Dean and also acting for MAFA). There is no evidence that Messrs Smits and Mahommed (or Vestecorp) had anything to do with the 2 August 2017 contract, save that they attempted (unsuccessfully) to insert themselves into the negotiations when they became aware of the administrators' first offer made on 13 June 2017. Mr Mahommed acknowledged in cross-examination that he had no knowledge of the negotiations that elicited the administrators' first offer. [734] Indeed, for the reasons explained at [808]-[811] above, I have found that Messrs Smits and Mahommed (and Vestecorp) did no work on behalf of BAD Nominees for approximately one year before that first offer was received from the administrators.
For those reasons, Messrs Smits and Mahommed and Vestecorp are not entitled to recover from BAD Nominees the amount of $250,000 claimed in item 19 of Schedule B of the Further Amended Cross-Claim.

[97]

Consideration of other aspects of Schedule B of the Cross-Claim

Items 1, 2 and 3 in Schedule B are the face value of the debts allegedly owing by Vangory Holdings to Mr Mahommed and A & K Harvey Power Consultants that were assigned to BAD Nominees under three deeds of assignment executed on 9 May 2016. [735] The recitals to each deed of assignment refer to BAD Nominees having offered to "purchase" the relevant debt from the relevant assignor and each deed contains an operative provision whereby the assignor "hereby assigns for valuable consideration" the assignor's right, title and interest in respect of the debt. [736] However, the deeds do not specify an amount of consideration. In explaining items 1, 2 and 3 of Schedule B in his affidavit affirmed on 8 March 2019, Mr Mahommed gave no evidence about any amount of consideration having been agreed for the assignment of the debts. Mr Mahommed's evidence impliedly asserted that the consideration was the face value of the debts. Mr Smits gave evidence that he could not recall any discussion about the consideration at the meeting with Mr Dean on 9 May 2016. [737] Assuming (without deciding) that each of the three debts was due and payable to the relevant assignor as at 9 May 2016, the cross‑claimants have not proved on the balance of probabilities that the amounts claimed in items 1, 2 and 3 of Schedule B were payable by BAD Nominees to the assignors in consideration for the assignments of the five year old debts.
Items 11 and 12 in Schedule B are stamp duty and registration costs incurred by Garslev in order to become the registered proprietor of the nine lots. [738] They are not expenses incurred by the defendants/cross-claimants on behalf of or for the benefit of BAD Nominees. It follows that BAD Nominees is not indebted to the defendants/cross-claimants in respect of the amounts of $55,000 and $2,800 referred to in items 11 and 12 of Schedule B. For completeness, I note that these costs have been taken into account in quantifying the benefit derived by Garslev from its knowing assistance in the breaches of fiduciary duty for which Garslev is required to account to BAD Nominees. [739]
Item 16 of Schedule B relates to the amount of $50,000 for security costs that was the subject of an und that Messrs Smits and Mahommed caused BAD Nominees and Garslev to give to the Court in the 2014 proceedings and the 2018 proceedings. The undertaking was given after 20 March 2018, when those proceedings were been conducted in the name of BAD Nominees but for the benefit of Garslev. The terms of the undertaking were to cause the $50,000 security to be paid from the proceeds of sale of the nine lots. [740] As I have referred to earlier in these reasons, Messrs Smits and Mahommed purported to allocate $50,000 of the monies paid into court by Garslev pursuant to the orders made in these proceedings on 1 February 2019 to the security for costs in order to comply with that undertaking. [741] The $50,000 sum in item 16 of Schedule B of the Further Amended Cross-Claim is not a debt payable by BAD Nominees to Garslev. On the contrary, it represents an amount by which the value of the constructive trust in favour of Overdean in respect of the monies paid into Court under the 1 February 2019 orders has been diminished but for which Garslev remains liable to account for and which may be recovered under the award of equitable compensation in favour of Overdean. [742]

[98]

Conclusion in relation to cross-claimants' first and second causes of action

For the reasons explained at [770]-[848] above, what are described in the Further Amended Cross-Claim as the cross-claimants' first and second causes of action (being claims to recover from BAD Nominees the amounts in Schedule B as debts and to recover those same amounts from Mr Dean under s 197 of the Corporations Act) fail.

[99]

Consideration of other aspects of the Cross-Claim

I now turn to consider the third, fourth and fifth causes of action pleaded in the Further Amended Cross-Claim.

[100]

Cross-claimants' third cause of action: Inducing breach of contract

The defendants/cross-claimants allege that Mr Dean induced or procured: 1. breaches by BAD Nominees of its alleged obligations under the 9 May 2016 documents (specifically, obligations to pay fees to Mr Smits and Vestecorp and obligations to cooperate with Messrs Smits and Mahommed and Vestecorp); and 2. breaches by BAD Nominees of its alleged obligations under the 20 March 2018 deed and the Garslev deeds.
Orders are to be made rescinding the 20 March 2018 deed and the Garslev deeds. Rescission takes effect ab initio. The second aspect of the cross-claimants' third cause of action therefore fails.
The first aspect also fails because: 1. the cross-claimants have not established any entitlement to the fees claimed for the reasons explained in detail above in relation to the cross-claimants' first cause of action; 2. to the extent that the cross-claimants rely on Mr Dean's conduct in asserting that BAD Nominees rights in relation to BLE had been assigned to MAFA, the cross-claimants have embraced that same position in those proceedings, as referred to at [151], [480] and [567] above; 3. to the extent that the cross-claimants rely on Mr Deans alleged failure to account to Messrs Smits and Mahommed for money allegedly payable to BAD Nominees and received by Mr Dean, I repeat [555] above; and 4. to the extent that the cross-claimants rely on Mr Deans' alleged refusal or failure to provide information to Messrs Smits and Mahommed, I repeat [557] above.

[101]

Cross-claimants' fourth cause of action: Claim for damages under s 68

The cross-claimants' fourth cause of action is misconceived. The cross-claimants have not sought or established a basis for an injunction restraining any breach of contract or an order for specific performance of any contract. The Court's power to award damages under s 68 of the Supreme Court Act is not in play.

[102]

Cross-claimants' fifth cause of action: Alleged contraventions of Schedule 2 to the Legal Profession Uniform Application Act 2014 (NSW)

The plaintiffs' claims have succeeded. I reject the defendants' allegation that the certification and filing of the third further amended statement of claim on 7 November 2019 contravened clause 2 of Schedule 2 of the Legal Profession Uniform Law Application Act: see [413] above. The cross-claimants' fifth cause of action fails.

[103]

V CONCLUSIONS AND ORDERS

For all of the reasons above, I make the following orders and notations: 1. Order that the deed of assignment dated 20 March 2018 between BAD Nominees (as assignor) and Garslev Holdings (as assignee) is rescinded ab initio. 2. Order that the deed of assignment dated 5 November 2018 between BAD Nominees, Garslev Holdings, Peter Mahommed and Leonardus Smits is rescinded ab initio. 3. Order that the deed of settlement dated 5 November 2018 between BAD Nominees, Garslev Holdings, Peter Mahommed, Vestecorp and Leonardus Smits is rescinded ab initio. 4. Order that Garslev account to Overdean (as trustee of the Dean Super Fund) for the net proceeds of sale of the following land that was the subject of the declaration made by this Court on 23 October 2017 in proceeding 2017/279755 that Beechworth Land Estates was authorised to sell the land to BAD Nominees (being an amount of $1,058,579 referred to at [749] of these reasons for judgment): Plan Lot Folio Address 616587E 16 11449/456 17 Braunthal Avenue, Beechworth 616587E 17 11449/457 19 Braunthal Avenue, Beechworth 616587E 18 11449/458 21 Braunthal Avenue, Beechworth 616587E 30 11449/484 28 Hayes Drive, Beechworth 616587E 47 11449/465 29 Hayes Drive, Beechworth 616587E 48 11449/466 27 Hayes Drive, Beechworth 616587E 49 11449/467 25 Hayes Drive, Beechworth 611593M 73 11655/777 Mossgrove Way, Beechworth 611593M 74 11655/778 Mossgrove Way, Beechworth

[104]

Declare that the monies paid into court during the period since February 2019 representing the net proceeds of sale of the land referred to in order 4 above, less the sum of $50,000, are impressed with a constructive trust for the benefit of Overdean (as trustee of the Dean Super Fund). 2. Order that the monies held in court that are impressed with the trust in order 5 above be paid to Overdean (as trustee of the Dean Super Fund). 3. Order that Peter Mahommed and Leonardus Smits pay equitable compensation to Overdean (as trustee of the Dean Super Fund) in the amount of $1,058,579 plus interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) for the period from 30 April 2019 until the date of these orders, such interest to be payable at the rate of 4 per cent above the cash rate last published by the Reserve Bank of Australia in respect of each 6 month period from 1 January to 30 June and from 1 July to 31 December within the period from 30 March 2019 until the date of these orders. 4. Order that the plaintiffs' claims for relief in the Third Further Amended Statement of Claim otherwise be dismissed, save for the question of costs which is reserved for determination on the papers. 5. Order that the Further Amended Cross-Claim be dismissed, save for the question of costs which is reserved for determination on the papers. 6. Note that, in these orders: 1. Brian Dean means the second plaintiff/second cross-defendant in these proceedings, Mr Brian Arthur Dean; 2. BAD Nominees means the third plaintiff/third cross-defendant in these proceedings, BAD Nominees (NSW) Pty Limited ACN 129 899 716; 3. Beechworth Land Estates means Beechworth Land Estates Pty Ltd; 4. Dean Super Fund means the superannuation fund established by Brian Dean in or about December 2012; 5. Garslev Holdings means the first defendant/first cross-claimant in these proceedings, Garslev Holdings Pty Ltd ACN 003 312 383; 6. Leonardus Smits means the third defendant/third cross-claimant in these proceedings, Mr Leonardus Gerardus Smits; 7. Overdean means the first plaintiff/first cross-defendant in these proceedings, Overdean Developments Pty Ltd ACN 109 387 457; 8. Peter Mahommed means the fourth defendant/fourth cross-claimant in in these proceedings, Mr Peter Shah Mahommed; and 9. Vestecorp means the fifth defendant/fifth cross-claimant in these proceedings, Vestecorp Financial Services Pty Ltd (CAN 003 856 442).
I will hear the parties in relation to costs. I am not aware of any reason why costs cannot be determined on the papers. I make the following directions: 1. By 5pm on 1 December 2021, the plaintiffs/cross-defendants are to file and serve written submissions of no more than five pages specifying the costs orders they seek and setting out their submissions in support of those costs orders. 2. By 5pm on 1 December 2021, the defendants/cross-claimants are to file and serve written submissions of no more than five pages specifying the costs orders they seek and setting out their submissions in support of those costs orders. 3. By 5pm on 8 December 2021, the plaintiffs/cross-defendants are to file and serve written submissions of no more than three pages in response to the defendants/-claimants' submissions in relation to costs. 4. By 5pm on 8 December 2021, the defendants/cross-claimants are to file and serve written submissions of no more than three pages in response to the plaintiffs' cross-defendants submissions in relation to costs.

[105]

Endnotes

Third Further Amended Statement of Claim (3FASOC).
Mr Dean's affidavit sworn 27 February 2019, paragraphs 6-12 and Exhibit 20 pp 232-312.
Mr Dean's affidavit sworn 27 February 2019, paragraphs 4-5; Exhibit 1.
3FASOC [4]; Mr Dean's affidavit sworn 27 February 2019, paragraph 9. He was the sole member when the Fund was established in December 2012, and there is no evidence of any additional members subsequently being admitted; Exhibit 20 pp 232-233,237, 253, 282, 297; T177.19-179.34. There is no evidence to support the defendants' pleaded contention that Mr Dean is not the sole beneficiary; second Further Amended Defence filed on 4 December 2019 (2FAD) [4(a)].
Mr Dean's affidavit sworn 27 February 2019, paragraphs 6-12; Exhibit 20, pp 229-312, 1688-1697.
Mr Dean's affidavit sworn 27 February 2019, paragraphs 6-12 and Exhibit 20, pp 229-312, 1688-1697.
3FASOC, paragraphs 8-11; 2FAD, paragraphs 8-11; In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd); Cussen and of Beechworth Land Estates Pty Ltd v Douglas Estate Holdings Pty Ltd and Others (2019) 140 ACSR 1; [2019] NSWSC 1129 at [2].
In the matter of Beechworth Land Estates Pty Ltd (administrators appointed) [2017] NSWSC 1447 at [6]; Photios v Cussen (in their capacity as joint administrators of Beechworth Land Estates Pty Ltd (admins apptd) [2015] NSWSC 336 at [12].
3FASOC, paragraph 15; 2FAD, paragraph 15; In the matter of Beechworth Land Estates Pty Ltd (2019) 140 ACSR 1; [2019] NSWSC 1129 at [4].
Exhibit 2, p 5.
Exhibit 2, p 28.
3FASOC, paragraph 21; 2FAD, paragraph 21.
3FASOC, paragraph 19; 2FAD, paragraph 19(b); Exhibit 20, pp 1647-1655.
3FASOC, paragraph 73.
Exhibit 20, pp 1717-1734.
3FASOC, paragraphs 87-91; 2FAD, paragraphs 87-91.
3FASOC, paragraphs 20(b)-20(c); 2FAD, paragraphs 20(b)-20(c); Exhibit 20, pp 1666-1677.
3FASOC, paragraphs 18, 20.
2FAD, paragraphs 18, 20.
3FASOC, paragraph 5; 2FAD, paragraph 5; Exhibit 20, pp 1634-1646.
3FASOC, paragraph 3; 2FAD, paragraph 3(a).

[106]

Amendments 20 January 2022 - Amendment to paragraphs: 452. [391]-[393] 750. [390]-[393] DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 January 2022

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